Voters in Switzerland have overwhelmingly rejected three citizen-backed proposals to protect the country's wealth by investing in gold, drastically limit immigration and eliminate a special tax that draws rich foreigners. The separate proposals - put to voters nationwide by conservative politicians, ecologists and a liberal group - had needed a majority of voters and Switzerland's 26 cantons (states) to pass. All generated headlines within and beyond the small but influential Alpine nation. The proposal to require the Swiss central bank to hold a fifth of its reserves in gold was opposed by 77.3 per cent of voters and supported by nearly 22.7 per cent, according to final results from Swiss broadcaster SRF. It would have forced the Swiss National Bank to buy massive amounts of gold within five years, likely causing its global price to jump."After this clear decision by the people, there are no further grounds to pursue another similar initiative," one of the three parliamentarians behind the proposal, Luzi Stamm, told Swiss broadcaster SRF. But he said the campaign had at least raised awareness of the central bank's shortcomings. The proposal to limit immigration to 0.2 per cent of Switzerland's population - about 16,000 immigrants a year for a country of 8 million - received the backing of 25.9 per cent of voters, while 74.1 per cent opposed it. None of the cantons came out in favour. Currently, immigration is estimated at around 80,000 a year. The "Ecopop" initiative would also have forced Switzerland to devote a large chunk of its foreign aid to programmes aimed at reducing population growth in poor countries. Andreas Thommen, a Green Party member who oversaw the campaign, told SRF it had been "a David and Goliath battle" against the establishment, and Switzerland "missed the opportunity to set the course for a sustainable future. A third national referendum, which would have abolished special tax discounts for rich foreigners living in Switzerland, was also defeated. About 59.2 per cent voted against the measure, while 40.8 per cent were in favour of it, and only one of the country's 26 cantons said yes to getting rid of a flat tax rate that helps attract the super wealthy. The gold reserve plan would have meant buying about 1500 tonnes of gold worth more than US$60 billion. The nationalist Swiss People's Party, the country's largest, brought the "Save our Swiss Gold" initiative, arguing it would restore trust in the central bank and its paper money. The proposal was opposed by the Government and financial leaders but aimed to capitalise on a growing sense of caution among the Swiss about the perceived dangers and increasing volatility of financial markets. Though the country is among the world's most prosperous, the initiative argued that owning gold would protect the country's wealth from trouble in markets beyond its control. The experience of the 2008 global financial crisis, triggered in part by complex investments that brought down multiple banks and bankrupted states, is fresh in people's memories. Geneva accountant Jacques Mayor said he was wary of the idea of Switzerland buying or selling gold in large amounts in international markets. "The last time they sold gold, we had an enormous loss," Mayor said. The central bank went US$10 billion in the red last year, when the value of its gold holdings slumped. Despite the perception that gold's value is protected by the fact it is a physical good, its market price can be quite volatile. The metal is used often by speculators as a safe haven. Recently, gold has lost much of its sheen. Its price has fallen 11 per cent in the past six months to around US$1200 an ounce. Until 1973, Switzerland was part of the Bretton Woods system of fixed exchange rates and the value of the Swiss franc was defined in grams of gold. But the Swiss National Bank (SNB) was criticised for holding excessive gold reserves that generated too little return. Moving away from this system allowed the bank to decide more freely how to invest its currency reserves. Fritz Zurbruegg, a member of SNB's governing board, notes the Swiss still hold a relatively large amount of gold in reserve. "At 125 grams per capita, Switzerland has the largest gold reserves per head of population of any country - triple those of Germany and quintuple those of the US," he told a conference last week. Zurbruegg said the initiative could disrupt the domestic economy. And the benefits would be dubious. "Gold which cannot be sold in a crisis no longer meets the definition of a reserve and thus offers no security at all." Swiss head to the polls over gold plan What was being voted on? A proposal brought by the Swiss People's Party to make the country's central bank hold a fifth of its reserves in gold within five years. What does this mean? The Swiss National Bank would have to buy about 1500 tonnes of gold worth more than $76.5 billion, and would be prohibited from spending any of the treasure, which would have to be locked away in vaults on Swiss soil. Why do it? The idea was opposed by the Government and financial leaders but aimed to capitalise on a growing sense of caution among the Swiss about the perceived dangers and volatility of financial markets.
