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Why the Swiss Government Killed the Swiss Franc’s Unique Role

Written by Gary North on February 17, 2012

Before 1992, the Swiss franc was once tied loosely to gold. You could not walk into a bank and exchange Swiss francs for a fixed quantity of gold. But there had to be gold in the central bank’s reserves. It could not inflate at will.

Then, in 1992, the Swiss government sold out to the IMF. It killed the franc’s unique position. This is from a retired banker, Ferdinand Lips.

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The disaster started when we joined the IMF in 1992. At the time I wrote articles against it and it almost didn’t happen. It was sold to the public, the Swiss public, as some kind of development aid. It was a lie and most of the people, even people in high finance, do not know what the IMF represents. And yet at that time two very ambitious ministers wanted to join–one of them was an internationalist and the other one a socialist–and they wanted to be in it.

This was the beginning of the end of the Swiss Franc, because, under IMF rules, a currency may not be linked to gold. A currency may be linked to anything in the world like pork bellies or soybeans, but not to gold. So that was the end of the Swiss Franc, but also of the Swiss banking system as we knew it, and of Switzerland as well. We have given away our uniqueness for nothing.

Then, in 1996, the Swiss central bank started to think about its new statutes. They said gold is no longer money. It is a commodity and so on. I had on the board of my bank a man who later became a member of government, Mr. Schmid. He was the head of the gold commission. He asked me what I thought about it. I wrote him a paper and told him that, from now on, our central bank is speculating. They should not do it.

He listened to me for a while. At the time, he was a National Counselor. He wanted to become Federal Counselor, and so he was more interested in his career. He did not understand gold. Nobody in parliament understands it. So the government and the finance department and the national bank had their way. I have never met anybody in Switzerland who wanted to sell gold. By the way, in Switzerland there is a vote on every important issue, but people were never asked about the sale of our gold. I think it is a crime, because the future of our country was undermined. . . .

After the collapse of the Bretton Woods Agreement [in 1971, when Nixon closed the gold window], the United States had a major responsibility to take the initiative to restore the world financial system, because it enjoyed the “exorbitant privilege,” as Charles de Gaulle called it. But of course, Europeans didn’t offer much inspiration either. After Bretton Woods, the U.S. used its exorbitant privilege to an even greater degree, meaning that its banking system could create money out of thin air and buy up the world. If Jacques Rueff, the famous French economist, who was advisor to Charles de Gaulle, was alive now, he would be absolutely panicked by what is happening. It might mean the end of the world as we know it.

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Rueff knew at the time what this would mean, and he said so. He persuaded de Gaule to start exchanging dollars for gold. More than anyone else, he forced the government’s hand. Nixon broke the promise of the government to pay an ounce of gold for every $35 brought by foreign governments. That ended Bretton Woods, the phony gold standard designed by John Maynard Keynes and the Communist agent, Harry Dexter White.

For the entire interview, click the link.

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One thought on “Why the Swiss Government Killed the Swiss Franc’s Unique Role

  1. Oil seems to have replaced gold as support for the dollar but any day now that could end and we would be on the paper standard like Germany in the 20's.