On 30 November, Swiss citizens will vote on an initiative that imposes significant constraints on the Swiss National Bank’s (SNB) conduct of monetary policy. A recent poll shows the initiative’s supporters ahead.
In this regard, Barclays Capital thinks that the passage of the referendum would not remove SNB independence, but would alter its incentives to pursue balance-sheet related unconventional policy measures,
Hence, the initiative if passed, likely would reduce the SNB’s commitment to the EURCHF floor, Barclays projects.
"As a result, it may increase the likelihood of the SNB following the European Central Bank (ECB) in introducing negative deposit rates," Barclays adds.
"While gold markets have been most focused on the issue, the five-year phase-in would limit volatility, though passage of the initiative likely would raise the long-term equilibrium price for gold, in our view," Barclays argues.
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