Luzi Stamm: champion of a new Swiss gold initiative

2012-AUG-02

Luzi Stamm was first elected to the Swiss National Council, representing the FDP (Liberal Democrats), in 1989. In 2001, as a result of debates over possible European Union membership for Switzerland, Mr Stamm changed parties – establishing his new political home at the SVP (Swiss People's Party). During elections to the National Council in 2007 he was the second most voted for politician in his canton of Aargau, and was re-elected as National Councillor. Now Mr Stamm and three other members of the Swiss National Council have started a signature campaign aimed at repatriating the portion of official Swiss gold reserves that are held outside Switzerland. The "gold initiative" (its official name is "Save our Swiss Gold") is aiming to collect 100,000 signatures. This interview was originally published in German at wirtschaftsfacts.de.

Mr Stamm, we would like to start with a general question. How important do you deem central banks' gold reserves in the face of a growing financial crisis?

LS: Very important! A country's independence is closely linked to the independence of its own national central bank. And a central bank will only maintain its credibility as long as it holds stores of value that preserve purchasing power – mainly gold.

Your gold initiative advocates greater protection of Swiss gold reserves. Are Swiss gold reserves not being well stored in SNB's vaults?

LS: Gold is very well stored when in the vaults of the Swiss National Bank. But it's unacceptable not to know where it is actually being stored. I think it's unbelievable that the public in Germany, America, Switzerland, etc are not being levelled with as to the whereabouts and/or ownership status of their gold – their "national wealth".

How does a central bank such as the SNB justify concealing the storage location of its gold reserves? Isn’t this undemocratic?

LS: This unacceptable situation started decades ago. I'm amazed to see that only now is this issue being touched upon in public discussion. This secrecy should indeed be alarming in a democracy.

Why do you think the SNB conceals the storage locations of its gold reserves from the Swiss public?

LS: If we try to give the SNB the benefit of the doubt, we could say that maybe the claim to be politically independent also implies a right to secrecy. But I don't agree.

Critics believe that central banks are publishing false statistics about their gold reserves. They repeatedly allege that throughout the past decades central banks have been lending or selling more gold to commercial banks than they're actually admitting. What's your opinion?

LS: It's no wonder that such rumours abound considering that central banks refuse to provide any information. It is especially alarming that gold might be lent. We often overlook the fact that lending can be as dangerous as selling (in case the debtor cannot pay back the gold or a specific government refuses to pay it back).

In order to assert your claims, your gold initiative is planning to hold a national referendum. How many signatures do you still need to make this referendum a reality?

LS: Unfortunately, thus far we have only collected half of the signatures needed (50,000). We would very much welcome help in collecting more signatures.

Why do central banks store part of their gold reserves abroad?

LS: Our National Bank justifies this on the grounds of keeping as much flexibility as possible in case it wants to trade gold.

What consequences will the continuous monetisation of government and bank debt by the Federal Reserve, Bank of England, European Central Bank and others have on the currency markets?

LS: You either burden taxpayers with debt, or you generate inflation as central banks are trying to do. And this indirectly affects the middle class, especially in the "wealthy states" such as Germany.

China is held up by many as “the last hope” for the global economy, given the problems in Europe and America. But are the data China publishes really valid? And what happens if, as many observers predict, China suffers a financial crash?

LS: In the long run China will certainly not solve Europe's (and America's) problems. And later, as China's population ages as a consequence of its "one-child policies“, it will encounter problems. If we ruin the dollar and the euro in the West, China will not save us.

The eurozone is on the verge of breaking apart. What will be the consequences for the Swiss economy?

LS: Devising the euro as a common currency for states whose economic development differed greatly was an obvious mistake. The introduction of the euro was a political project and contradicts the logic of economics. A disruption of the euro would be beneficial in the long run – even for Switzerland, which depends especially on the economic situation in Germany.

Mr Stamm, we thank you for this interview and we wish you and your colleagues at the gold initiative great success with your campaign.