3 That made conversion all the more time-consuming, and there were no electronic aids in those days. And although the exclusive right of coinage was really a cantonal prerogative, foreign gold and silver coins actually constituted the bulk of monetary circulation in terms of value. The cantons did not see any reason to mint money which was worth its face value. For everyday use they preferred to produce representative coins whose metal content was worth well below the nominal value. In this way, the cantons used their exclusive right of coinage as an easy source of funds. 4 This resulted in an over-supply of lower-quality representative cantonal coins, which circulated freely between the cantons. Problems relating to the deterioration of coinage were a recurring theme in the legislative assembly. The hopeless confusion resulted in mix-ups, hampered trade and travel, and meant that capital remained idle. 5 Sixty years later, however, in 1890, the Swiss multiple currency period was already past history. Nevertheless, Swiss monetary history had remained eventful. Since 1850, the Swiss franc had been defined in terms of silver, in line with the French franc, and after 1860, it was also defined in gold. 6 At the same time, foreign money was still in use, in the form of coins worth their face value. Unlike the situation in 1830, banknotes played an important role in payments transactions in 1890 (if not, perhaps for buying bread), partly because coins are unpractical for larger transactions. By now, the Federal Banknote Act of 1881 had come into effect.
The initiative is dangerous because it would weaken the SNB. The connection between a minimum share and a ban on selling which it embraces would very greatly restrict our monetary policy room for manoeuvre, since the SNB only retains its full capacity to act when  BIS central bankers’ speeches  5  it is in a position to adjust its balance sheet to monetary policy requirements – in other words, if the SNB can expand or shrink it – without any restrictions. The value of this flexibility in reality has been impressively demonstrated in the past few years by two measures which allowed us to avert substantial damage from our country. First, the SNB supported the country’s biggest bank by establishing a stabilisation fund, thereby stabilising the Swiss financial system. Second, it combated the massive overvaluation of the Swiss franc by introducing a minimum exchange rate of CHF 1.20 to the euro. With the minimum share of gold and the selling ban demanded by the initiative, enforcement of measures like these would have been very much more difficult. Consequently, the initiative would make it considerably harder for us to intervene with determination in a crisis situation and fulfil our stability mandate. For this reason, the gold initiative could result in worse money instead of better money, totally in contradiction to the intentions of the originators. Introduction of plain money A popular initiative is also behind the third reform idea – the introduction of plain money.