The SWP are sometimes known as “gold bugs” – people who believe gold to be one of the best stores of value and that money should be backed by a commodity. They also oppose monetary easing.
Since the 2008 financial crisis the Swiss central bank has intervened in currency markets to ensure the Swiss franc does not rise in value.
A stronger currency could harm Swiss exporters as their goods would become more expensive in euro terms. The central bank has been weakening the franc by buying euros – which raises demand for euros and increases their value – and selling francs – which raises the supply of francs and lowers their value. This requires the central bank to expand its balance sheet.
The Swiss central bank’s balance sheet has increased roughly five-fold since 2008, driven mostly by larger foreign currency holdings. This would have been more complicated under the 20 per cent rule as for every one franc of balance sheet expansion, 20 cents would have to be in gold.