Swiss Government Opposes New Restrictions on SNB Investments

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Switzerland’s government opposes a measure that would forbid the central bank, pension funds and foundations from investing in munitions-makers, saying it wouldn’t be effective.

The pending popular initiative would make it impossible for the Swiss National Bank from investing in a market-neutral way and would also create a precedent for other restrictions, like holdings in tobacco companies, the government said in a statement on Friday.

The SNB, which has 20% of its foreign currency reserves worth some 760 billion francs ($762 billion) invested equities, is frequently the target of such reform proposals, with voters in recent years rejecting measures revolutionizing its role in the banking system and forcing it to hold a fixed portion of its assets in gold.

No date for a national vote has yet been set for the defense company measure, which would ban the SNB and other entities from holding shares in firms that derive more than 5% of annual revenue from weapons production. It would also disallow granting loans to such companies.

Citizen-led proposals -- known as initiatives -- are commonplace in Swiss politics, and span everything from health care to European Union membership. At least 100,000 signatures are needed for a measure to come up for a national ballot and the government is required to issue a view.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss, Lucy Meakin

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