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Federal Law on Currency and Legal Tender to enter into force on 1 May 2000

12. avr 2000 - The new Federal Constitution has abolished the gold standard of the Swiss franc on the constitutional level. On the legal level, the link between the Swiss franc and gold will be severed within the framework of a new Federal Law on Currency and Legal Tender. This new law incorporates all relevant characteristics of currency and legally accepted money.

The new Federal Constitution has abolished the gold standard of the Swiss franc on the constitutional level. On the legal level, the link between the Swiss franc and gold will be severed within the framework of a new Federal Law on Currency and Legal Tender. This new law incorporates all relevant characteristics of currency and legally accepted money.

The Law on Currency and Legal Tender was approved by both houses of parliament in the winter session of 1999. The deadline for a referendum expired on 20 April 2000. The Federal Council decided to put the new law into force as from 1 May 2000.

When this law is put into force it will create the conditions for a revaluation of the gold reserves of the Swiss National Bank (SNB) and the sale of gold. In order to prevent any adverse effects on the price of gold, the SNB will closely co-ordinate its sale of gold with other European central banks within the framework of an agreement made last September. However, the Law on Currency and Legal Tender does not allow to use the proceeds of the SNB's sale of gold reserves no longer needed for monetary policy (1'300 tonnes) for other purposes. To this effect, a special legal basis shall be created on the constitutional level. In accordance with the decision of the Federal Council of 19 January 2000, gold reserves to an extent of 500 tonnes are to be used to fund the Swiss Solidarity Foundation. Various possibilities for the use of the remaining 800 tonnes, worth some 10.4 billion Swiss francs with annual earnings of some 300 million Swiss francs in real terms, are currently being examined. These include additional payments for people who are put at a disadvantage by the 11th revision of the Old Age and Survivor's Insurance and additional support of old persons and young families with low income, financing educational measures, particularly in the field of new IT and communication technologies, and the repayment of public debt. Such plans, however, require a specific legal basis.

The Coinage Act is integrated into the new federal law. The provisions of the National Bank Law pertaining to banknotes are transferred to the Law on Money and Legal Tender.

Simultaneously to the Law on Currency and Legal Tender, the revised Coinage Ordinance will also come into effect, adapted to the new law. Furthermore, as a direct consequence of the definitive repeal of the SNB's obligation to convert the Swiss franc into gold and the abolishment of the gold parity of the Swiss franc, the Federal Council's decisions of 29 June 1954 and of 9 May 1971 will be repealed.

Information:
Marianne Widmer FDF / FFA 031 322 54 31
Werner Abegg SNB 01 631 31 11

april 12 2000

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