SWITZERLAND - The Swiss National Bank (SNB) has rejected an initiative to use its profits to prop up the AHV/AVS state pension as "dangerously populist" and "unrealistic".
Jean-Pierre Roth, chairman of the Governing Board of the Swiss National Bank, said the Cosa initiative, proposed by the Social Democratic party, presented an unrealistic picture of the SNB’s profit potential.
“Those who launched the people’s initiative speak of an annual disposable profit of about CHF2.5bn, while our estimates put it at around CHF1bn billion,” he commented.
Roth said financial pressure on the Old Age and Survivors' Insurance Fund (AHV/AVS) would continue to grow in the coming years, and that the gradual reduction of the SNB’s distribution potential would inevitably lead to continuous tensions between political circles and the SNB.
The SNB should be shielded from such pressure to preserve monetary stability, he argued.
“Even if our independence were left intact, this conflict-laden climate would be detrimental to our credibility in the markets,” warned Roth.
Roth expressed a desire for the SNB to be wholly separate to the political machine, not least because this would prevent people from misinterpreting its remit.
“Central banks everywhere deliver their profits to the government, and it is the government that allocates the funds to the different budget items.
“Establishing a direct link between the social security system and the central bank would give our fellow citizens the impression that the National Bank would be able to cover the future financial needs of the AHV/AVS without the need for further reforms,” he argued.
The Cosa initiative would not succeed in fulfilling its financial promises to the AHV/AVS, and would not bring in a single extra franc to the state coffers, he added.
“It will put the functioning of our institutions at serious risk. The wise thing to do, therefore, is to reject the initiative,” Roth advised.
A referendum in September will discover whether the initiative has popular support.
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