That probably means it's a good idea ;)

Full reserve banking isn't quite what is being voted on here, but if it were to be implemented it wouldn't be so different to what Switzerland already has.

I have a Swiss account with UBS. Interest payments on my accounts are effectively zero. Not quite zero but so close it makes no odds. I am happy about this because the SNB is actually trying to force interest rates negative - like most banks, UBS is shielding me from negative interest rates (i.e. direct confiscation of savings) using its own profit margin.

However, the issue remains that I get no yield on my money. Or, no, wait, actually I do, because my banks also offers many different kinds of investment funds with high degrees of liquidity, transparency about what they do, their performance and their different degrees of risk. So I put a big chunk of my money into these sorts of funds (and yes yes, I know, there are better funds out there, I don't only use UBS).

I think this approach is better for two reasons:

1. It's always clear how much of my money is effectively risk-free deposits, and how much is "working at risk".

2. It divorces retail banking services from investment services. For instance if I happen to like a banks customer service, e-banking portal, mobile app, credit card offerings or whatever, I can benefit from those, without needing to take it as a bundle with perhaps riskier lending practices.

The low risk funds I use are mostly short-medium term loans to Swiss business, but I could invest in mortgage funds if I wanted to.

It seems to me that if all banks in Switzerland had to go full reserve, then it'd mean relatively little change for people like me. Some bank customers who don't explicitly invest their money would now have to, if they didn't want to lose yield, but inflation in Switzerland is quite low so I suspect some people would be happy with just knowing their money is where they left it and is going to stay there. Investment isn't for everyone.

> That probably means it's a good idea ;)

This is just pure contrarianism. Experts also say it's a bad idea not to have clean drinking water, reliable electricity, and seatbelts in cars.

And believe it or not, there is a huge amount of data on what kinds of policy in banking work and what don't, leading experts to conclusions like these. We're not talking about a few naysayers, either. The Swiss National Bank themselves, who will be put in charge of all lending if this is implemented, say this is a bad idea.

https://www.amazon.com/Wrong-us---Scientists-relationship-co...

The dubious reliability of much advice presented in the media as expert advice is one of the impending themes of our time. Expect skepticism about "experts" (defined as the sort of people who we tend to be told are experts when debating matters of politics, wealth or health) only to increase in the coming years.

The Swiss National Bank themselves, who will be put in charge of all lending if this is implemented, say this is a bad idea

The Overton window of acceptable thought in central banking is laughably narrow. Central bankers should really be the last people who are listened to on changes to how the monetary system works - they will always argue for minor changes to the status quo.

Difference: There's scientific evidence for the experts opinion in all these cases. Economics? That's more or less just crystal ball reading with a scientific shim on the top.

The opinions of an economist are worth very much, because listening to them sets up situations were it is easy for someone with an economics degree to push an agenda. But economists do have a lot to offer with observations like "this is very similar to the [suchandsuch incident] of [1887] in [Somewhere]", which is worth listening to. The limitations that surround economic 'experiments' are so severe it should be treated more like history and less like physics. Thomas Piketty with Capital in the 21st century is a great example of what I'm thinking - more history and data than theory, but some theory to provide structure to the data.

If science has a measure of quality, then that quality is the accuracy of its predictions. That ties in very closely to the ability to conduct experiments and collect accurate data. Economics as applied is a highly political process, which hampers both the perceptions and reality of how fair the experiments are.

Using a single positive statement instead of a double negative would bring much needed clarity.

>Experts also say it's a good idea to have clean drinking water, ...

> That probably means it's a good idea ;)

This is a really bad heuristic.

Going "full reserve" would drastically contract the money supply and have pretty severe effects on the real economy.

A society that spends all its time and effort on bad investments like building statues and blowing them up again, is a society with a problem, yet by the metrics used by conventional economics, it'd be doing great! Full employment! Tons of production! GDP increasing!

As long as economic activity is driven by individuals it is inherently better.

My build-statues-and-blow-it-up example was deliberately exaggerated for clarity and effect. In the real world malinvestment tends to look like asset bubbles, the construction of houses that nobody needs, "airports to nowhere" (like the cases of that happening in Spain) and so on. It may look like beneficial economic activity when you're zoomed all the way in, but when the free money dries up, suddenly it becomes clear that maybe strippers shouldn't be allocated two houses, or maybe airports should be built near population centers, and so on.

Anyone who can print money from nothing can essentially override the judgement of wider society about how best to allocate resources. Note that resources can also be allocated towards savings, but that tends to suppress economic activity, so people whose job performance is judged by measuring economic activity invariably end up attacking savings. Hence the frequency with which central banks try to push down interest rates.

Of course at that point people are actually treating the entertainment value as an asset rather than the statue and explosives themselves so maybe that’s also completely reasonable.

You can do that, it's called a Certificate of Deposit (CD)

The problem I see with this law is that as a Swiss law it can not have the intended result. But globally reforming banking this way would probably be very effective at fixing the absurd state of global economics.

In the US banks offer this through websites.

Fractional reserve banking? https://en.wikipedia.org/wiki/Fractional-reserve_banking

Aka, the way things already work.

Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves

https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_...