ZURICH, Nov 15 (Reuters) - The Swiss National Bank repeated its opposition to a referendum on boosting gold reserves on Saturday, saying a yes-vote would put at risk its efforts to rein in the red-hot franc against the euro for as long as necessary.
SNB board member Fritz Zurbruegg said in a newspaper interview that the right-wing Swiss People’s Party (SVP) attempts to impose requirements on Swiss gold holdings would complicate efforts to keep the franc down, and ultimately hurt the economy.
The Swiss franc’s rise towards a 1.20 cap against the euro is testing the Swiss central bank’s resolve to restrain the surging currency, just two weeks ahead of the vote on whether it should hold more gold.
“The threshold has been crucial and needs to remain in place for as long as necessary,” Zurbruegg told Switzerland’s Corriere del Ticino newspaper.
“If the initiative goes through, our capacity to intervene on currency reserves will be reduced dramatically, with unfavourable consequences for the Swiss economy.”
The “Save our Swiss gold” proposal, spearheaded by the SVP, aims to ban the central bank from offloading its reserves and oblige it to hold at least 20 percent of its assets in gold.
The SVP argues that the referendum, which goes to Swiss voters on Nov. 30, will secure a stable franc. The SNB, which traditionally stays out of politics altogether, has stepped up its opposition to what it sees as potentially “disastrous” consequences from the initiative.
The vote has worried both gold and currency dealers, since it would require the Swiss National Bank to bolster its holdings of the precious metal if it passed.
The SNB has vowed to vigorously defend the three-year-old cap on the Swiss franc, saying it could intervene in currency markets or impose negative interest rates if necessary. (Reporting By Katharina Bart and Silke Koltrowitz. Editing by Jane Merriman)