After Credit Suisse, some people now want the Confederation to be able to nationalise banks in the event of a crisis. An attractive idea... but deeply misleading. Because the problem is not bank ownership - it's the monetary system itself: money creation through credit, fractional reserve banking and property bubbles fuelled by a manipulated franc. Before socialising the losses, it would be time to look at the real cause of the disorder.
By Ludovic Malot
In the wake of the Credit Suisse debacle, some Members of Parliament want to introduce the possibility of temporarily nationalise a bank to «save the system». The Council of States has just agreed to study this idea, put forward by Beat Rieder.
At first sight, the proposal seems pragmatic: if a bank threatens to collapse, the state will intervene.
But this approach treats the symptoms and completely ignores the disease.
Because the fundamental problem is not bank ownership.
The problem is the monetary system itself.
The Swiss taboo: private money creation
Today, more than 90% of money in circulation is not created by the Swiss National Bank (SNB).
It is created by commercial banks via credit, thanks to the fractional reserves.
In other words:
When a bank grants a home loan of CHF 1 million, this money did not exist before.
It is created ex nihilo in the banking system.
This mechanism mechanically causes :
- ongoing credit expansion
- financial bubbles
- explosion in property prices
- concentration of banking risk
And when the bubble threatens to burst?
Suddenly we're talking about nationalise losses.
Swiss real estate: a symptom of uncontrolled money creation
Since 2000:
⮕ residential property prices in Switzerland have more than doubled
⮕ mortgage debt exceeds 1,100 billion francs
⮕ Switzerland has one of the highest the highest levels of private debt in the world
Why is this?
Because money creation is mainly directed towards real estate.
Banks lend against collateral.
And real estate is the ideal collateral.
Result:
⮕ asset inflation
⮕ enrichment of wealth holders
⮕ gradual exclusion of younger generations from the property market
The Swiss franc is no longer a stable anchor
Another taboo: SNB policy.
The National Bank currently has more than CHF 800 billion in assets, many of which are in foreign equities and bonds, particularly American.
For years, the SNB has :
- created hundreds of billions of francs
- to buy foreign assets
- to weaken the franc
This policy has inflated the money supply and asset bubbles, while exposing national wealth to global financial markets.
Nationalising a bank solves nothing
Even if the State became the temporary owner of a bank, the system would remain the same:
- private money creation
- extreme bank leverage
- final socialisation of losses
Nationalisation then simply becomes the ultimate insurance for the banking system.
Privatisation of earnings.
Collectivisation of risks.
The real debate that Switzerland refuses to have
If we want real financial stability, the questions lie elsewhere:
- should bank money creation be limited?
- should fractional reserves be reformed?
- Should the SNB be redirected towards tangible and strategic assets?
- should we reduce the financial system's dependence on real estate?
As long as these subjects remain taboo, every banking crisis will lead to the same scenario:
panic, rescue, socialisation of losses.
Conclusion
Nationalising a bank in crisis means applying a dressing to a systemic fracture.
The real question is much more disturbing:
Who controls the creation of money in Switzerland?
As long as this power remains essentially in the hands of the private banking system, financial crises will continue to recur - and taxpayers will always be called upon to foot the bill.
It's time to reopen the monetary debate.
For the stability of the country.
For intergenerational equity.
And for Switzerland's economic sovereignty.