Rather than prevent new crises, implementing the “sovereign money” initiative would merely create uncertainty and compromise the competitiveness of Swiss banks, says Philippe Bacchetta. According to the professor of economics at the University of Lausanne, the excesses of the banking sector are primarily due to incompetence and a lack of prudence. swissinfo.ch: According to the proponents of this initiative, the creation of money by commercial banks encourages speculation and financial bubbles. Does this view correspond to reality? “A number of aspects relating to how this initiative would be implemented are unclear. It would create a new level of uncertainty that would weaken Switzerland as a financial centre.” Philippe Bacchetta: No, this view has nothing to do with reality. Theoretically, it’s conceivable that a link could exist between money creation and speculation, but in reality no serious study has ever demonstrated such a link. What’s more, the proponents of this ...
