Helicopter money is a favorite tool among central banks to boost a local economy. In Switzerland, that situation is unlikely to change. In fact, some people effectively want the Swiss central bank to issue as much as $55 billion to all citizens.
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A lot of people do not see the damage helicopter money can trigger. In the short-term, it provides those in need with “free money“, but it comes at a cost. Underestimating that cost is what resulted in the financial crisis of 2008, and the current financial concerns imposed by COVID-19. There is no point in continually creating money out of thin air, as it has no long-term value.
That being said, the Swiss population may have a say in the matter. More specifically, a group of voters wants the central bank to issue helicopter money to all residents. If successful every Swiss resident gets 7.500 francs. This equals a total package worth 50 billion francs, or $55 billion. A good way to destroy this strong economy, to say the least.
The private individuals now have 18 months to collect at least 100,000 signatures. Doing so is only the first step, however. A national vote will take years to organize, let alone come to a result. Both the Swiss government and parliament will need to weigh in on this matter.
Helicopter money is rarely used to effectively help the public. More often than not, central banks use this method to help failing banks or large corporations. Turning the tables is interesting, but it will ultimately fail. Implementing such methods should never be done on a whim.
Similar to other countries, Switzerland will note a contraction of GDP, exports, imports, and so forth. However, a recent report by Seco shows the economic slump isn’t that big compared to other countries. As such, using helicopter money seems completely unnecessary.
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