September 24, 2002
Swiss in no gold rush to spend their windfall By Nic Hopkins
THE wealthy often say that money comes with its own problems. One of those worries, presumably, is the vexing question of what to do with the cash when you have more than you need. Take the Swiss. This country of 7.3 million people cannot decide what to do with a spare $13 billion (£8.36 billion).
At the weekend Swiss voters failed to arrive at a decision on how to spend their windfall, as a result of a decision by the National Bank in 2000 to offload Switzerland's hoard of 2,590 tonnes of gold. The bank's reserves could eventually fetch SwFr19 billion (£5.2 billion) and is easily the biggest in the world per capita.
Daniel Eckman, a spokesman for the federal Finance Ministry, said: "I understand it's an unusual position to be in, but we are not in a hurry. Of course, we must choose wisely, but after this weekend everything goes back to square one."
One of two options put before Swiss voters in a referendum at the weekend was to bolster the nation's state pension scheme. Switzerland has an ageing population, but only 48 per cent of the 4.7 million-strong electorate backed the proposal.
Another proposal was to spend interest income from the windfall to fund a Solidarity Foundation for the needy at home and abroad, a suggestion first conceived as a counterweight to accusations that the Swiss were cold-blooded profiteers during the Second World War.
Mr Eckman said that proposals now being considered included dividing the cash between the country's cantons, using the money to reduce national debt and financing an innovation fund to boost the national economy.
The Swiss Government had originally proposed the establishment of the Solidarity Foundation to support victims of the Holocaust or any other sufferers of genocide or disasters.
But Christoph Blocher, a billionaire businessman and Swiss nationalist, said: "The unspeakable Solidarity Foundation cannot be created." The chief opponent to the foundation added that the Swiss people "cannot be blackmailed".
Pressure from the international community to make some kind of atonement towards Jews and their suffering was eased when Swiss banks agreed in 1998 to pay $1.25 billion in an out-of-court settlement to victims of the Nazis and their heirs.
Despite the failure of the Swiss voters to make a decision at the weekend, Mr Eckman said that there was support for using the windfall to bolster state pensions, and that it was likely the plan would be revisited.
"We think as much as 70 per cent of people want to give something to the pension funds," he said.
There are no proposals, as yet, to consider using the funds to underpin Switzerland's shaky corporate landscape. The economy dipped into recession last year and the official forecasts are for growth of less than 1 per cent this year.
The rate of unemployment remains low, but has edged up as a result of job cuts at companies such as ABB, one of Europe's largest electrical-engineering companies, and the Credit Suisse Group, the nation's second largest bank.
If the Swiss require inspiration they could look elsewhere. Other nations have also grown tired of storing gold, including the UK. In 1999 the Treasury decided to run down its reserves of 415 tonnes of gold in an attempt to cut Britain's exposure to movements in the price of the metal. At the time the Government said that it would invest 40 per cent of the sale proceeds in the US dollar, 40 per cent in the euro and 20 per cent in the yen.
But the Swiss could also point to a World Gold Council (WGC) study which argued that the Bank of England might be £175 million better off if it had decided against the gold sale.