Zurich | Reuters –– Switzerland’s government on Tuesday urged voters to reject a campaign to ban trading in agricultural derivatives, saying the well-meaning attempt to alleviate world hunger would not succeed and only jeopardize Swiss jobs and tax revenue.
The “No Speculation with Food” initiative is subject of a binding referendum on Feb. 28 under Switzerland’s system of direct democracy.
Proponents argue that speculative transactions create volatility and lead to hunger and poverty. They point to a study by the Federal Institute of Technology in Zurich that speculation can account for 60 to 70 per cent of price movements, making it harder for poor countries to afford food.
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The measure would amend the constitution to ban banks, trading houses, insurers and other investors and wealth managers in Switzerland from dealing for themselves or for clients in financial instruments based on agricultural commodities or food.
The government noted that no trading platforms for such products exist in Switzerland and that companies could easily circumvent a ban limited only to this country.
Banning such trades would harm the economy, it added, noting the costs it would impose on the many Swiss-based trading companies, insurers, banks and pension funds that deal in farm product derivatives.
It would also impinge on economic liberties and raise questions about Swiss policies at a time the economy was also labouring under the impact of a strong currency, it added.
— Reporting for Reuters by Michael Shields in Zurich.
