Sovereign money in Swiss context

Sovereign money is full-value legal tender which is created and brought into circulation by public institutions, typically a central bank, rather than commercial banks.

Currently, coins and banknotes are the only forms of sovereign money available to the public, although the term also applies to deposits held on sight by the commercial banks with the central bank.

Only around 10 per cent of the Swiss money supply is created by the SNB at present, compared with 90 per cent created electronically by the commercial banks, the campaigners say.

Their proposal aims to guard against bank runs by giving customers access to “full money” accounts — which will be off the commercial banks’ balance sheets and backed with central bank money.