The gold franc was the unit of account for the Bank for International Settlements

Bank for International Settlements

The Bank for International Settlements is an intergovernmental organization of central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks." It is not accountable to any national government...

 from 1930 until April 1, 2003. It was replaced with the Special Drawing Right. It was originally based on the Swiss franc

Swiss franc

The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...

, and remained at the value the Swiss franc was pegged (0.290g fine gold) after the Swiss franc came off the gold standard.

The gold franc was used in the Anglo-French Condominium of the New Hebrides

New Hebrides

New Hebrides was the colonial name for an island group in the South Pacific that now forms the nation of Vanuatu. The New Hebrides were colonized by both the British and French in the 18th century shortly after Captain James Cook visited the islands...

 (now Vanuatu

Vanuatu

Vanuatu , officially the Republic of Vanuatu , is an island nation located in the South Pacific Ocean. The archipelago, which is of volcanic origin, is some east of northern Australia, northeast of New Caledonia, west of Fiji, and southeast of the Solomon Islands, near New Guinea.Vanuatu was...

) as the currency in which the joint administration's postal service denominated its stamps. This added to the already confused situation in which the Australian dollar and the New Hebrides franc

New Hebrides franc

The franc was the currency of the Anglo-French Condominium of the Pacific island group of the New Hebrides . It circulated alongside British and later Australian currency. The New Hebrides franc was nominally divided into 100 centimes, although the smallest denomination was the 1 franc...

 were used in normal trade (and in which even the pound sterling

Pound sterling

The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 turned up the columns of earlier joint administration budgetary documents).

Gold Franc Initiative

On March 9, 2011, a parliamentary initiative

Initiative

In political science, an initiative is a means by which a petition signed by a certain minimum number of registered voters can force a public vote...

 was deposited in the National Council of Switzerland

National Council of Switzerland

The National Council of Switzerland is the lower house of the Federal Assembly of Switzerland. With 200 seats, it is the larger of the two houses....

 to institute a gold franc as additional currency for Switzerland

Switzerland

Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

:

This initiative is to be examined by the Committee for Economic Affairs and Taxation. Unlike the pre-2003 version, this gold franc would be defined as 0.1 gram

Gram

The gram is a metric system unit of mass....

 of fine gold

Gold

Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

. The initiative does not remove, replace or peg the existing Swiss franc, therefore both the gold franc and the Swiss franc would coexist side-by-side. Due to the fixed metallic content of the gold franc, its exchange rate with the Swiss franc would go up and down according to market supply and demand, like any other free-floating currency.

The gold franc is intended to become a safe-haven currency

Hard currency

Hard currency , in economics, refers to a globally traded currency that is expected to serve as a reliable and stable store of value...

 that will divert international capital flows in times of financial crises

Financial crisis

The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these...

 away from the Swiss franc. A prototype of the future 10 gold francs coin was presented to the media by Thomas Jacob, president of the Gold Franc Association.

The gold franc is completely independent from the gold reserves of the Swiss National Bank

Swiss National Bank

The Swiss National Bank is the central bank of Switzerland. It is responsible for Swiss monetary policy and for issuing Swiss franc banknotes.The names of the institution in the four official languages of the country are: ; ; ; ....

. It will be minted only by Swiss commercial banks

Banking in Switzerland

All banks in Switzerland are regulated by Swiss Financial Market Supervisory Authority , which derives its authority from a series of federal statutes...

, under the supervision of the Swiss Confederation. Institution of the gold franc would make it easier for small savers to invest in gold, as one gold franc would be worth only around $6 at August 19, 2011 prices; whereas the standard one-kilogram gold bar was worth around $60,000 at the same time.

External Links

• Gold Franc Association - coordinating the efforts to introduce the gold franc as additional currency in Switzerland.