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Will next months vote create volatility for the Swiss Franc?

Will next months vote create volatility for the Swiss Franc?
May 22
08:31 2018

Next month on the 10th of June there will be a key vote in Switzerland. It’s being labelled as ‘Vollgeld’ and it pertains to whether the Swiss want to reform their monetary system in an unprecedented way.

There hasn’t been much talk of this Referendum in the economic world outside of Switzerland because a ‘Yes’ vote is apparently highly unlikely. I guess there are parallels with the Brexit vote which few expected, so I wouldn’t rule out a major move for CHF exchange rates should there be a shock decision.

If there is a Yes vote there will be a lot of uncertainty, and I would expect to see the Swiss Franc drop in value as a result.

Vollgeld would convert commercial bank deposits into Swiss National Bank liabilities, and this would temporarily replace the gap on commercial bank balance sheets with SNB loans. This means that commercial banks would no longer be allowed to create money when lending.

A shock to the system could substantially weaken the CHF, and although a Yes vote isn’t expected, it’s worth preparing for or planning around if you have an upcoming currency requirement.

There have been some political shocks in recent memory, and I think the markets are weary of these shocks due to some big examples being fresh in the memory.

If you have a large currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency. A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Joseph Wright) on jxw@currencies.co.uk and I will endeavour to get back to you as soon as I can.

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Joseph Wright

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