Swiss voters will decide this Sunday whether to turn back on fractional-reserve banking and support a “sovereign money” concept for the nation’s finances. Proponents of the initiative prescribe deeper centralization to remedy the shortcomings of the traditional financial system – a vision quite different from the decentralization that came with cryptocurrencies like bitcoin, following the 2008 global financial crisis. In today’s Bitcoin in Brief, we also cover a statement by a prominent Russian banker who warns that tight crypto regulations would hamper the development of blockchain technologies.
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Switzerland Decides Fate of Fractional-Reserve Banking
Decentralization vs deeper centralization – the two alternative visions on how to respond to the 2008 financial crisis have been competing for attention and support in the past decade. The first strategy has been at the core of the crypto revolution. It is the remedy prescribed by both the growing global bitcoin community and the supporters of the small government/low taxes concept, like the followers of the Tea Party movement in the U.S. The proponents of the second approach have advocated granting more power and even greater responsibility to centralized financial authorities.
On Sunday, June 10, Swiss voters will be asked to support “Vollgeld,” a radical reform aimed at further centralizing financial authority in the hands of the country’s central bank. On the “sovereign money” referendum, the Alpine nation will decide whether to ditch the fractional-reserve banking system, which allows banks to create money by lending far more than what they hold in deposits, Quartz reports. The proposal is to give the Swiss National Bank a monopoly over this function, while commercial banks will be required to