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Contribution Details

Type Master Thesis
Scope Discipline-based scholarship
Title The sovereign money reform as an attempt to prevent the risk of future financial crisis
Organization Unit
  • Marco Bächinger
  • Jean-Charles Rochet
  • English
Institution University of Zurich
Faculty Faculty of Economics, Business Administration and Information Technology
Date May 2016
Abstract Text Money, against the opinion of the majority, is currently produced by commercial banks. This paper focuses on the money creation process by firstly providing a historical overview and an explanation of the different theories about money creation. Subsequently, the current process of money creation is described. As this process is dominated by profit maximizing commercial banks, and in light of the recent financial crisis, alternatives to this money creation mechanism are analysed. The main alternative suggested by this paper is the sovereign money theory. In particular, special focus is given to the sovereign money initiative currently running in Switzerland (''Vollgeld-Initiative"). Even though the findings of this paper are in favour of a monetary reform, it is not possible to provide a final answer to the question of whether the sovereign money initiative in Switzerland can truly stabilize the economy and reduce the risk of future financial crises. Thus, it is concluded that, as a sovereign money regime is not implemented in any jurisdiction, the uncertainty and risk as a first mover might be too high for Switzerland.
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