Government and cantons strike gold

The government has solved the problem of what to do with the excess gold reserves Keystone

The proceeds from the sale of 1,300 tons of surplus gold in Switzerland are to be divided among the federal government and the cantons.

The cabinet announced the decision on Wednesday, ending an eight-year debate over what to do with the Swiss National Bank’s excess.

According to the finance ministry, the cantons will receive SFr14 billion ($12 billion), while the federal government will get SFr7 billion.

This decision comes after the Senate rejected for the second time a proposal by the House of Representatives to put the proceeds into a fund and distribute the annual interest.

The proposal had called for two-thirds of the money to go to the state old-age pension fund and one-third to go to the cantons.

Compromise solution

The finance ministry said the government had chosen to distribute the money because it did not see any legal reason for the Swiss National Bank to hold onto it.

It added that it was not feasible to continue working towards finding a compromise solution and that a decision had therefore to be made.

The ministry had been charged with working out a solution for what to do with the excess gold.

It said the distribution of the proceeds from the sales of the 1,300 tons would start in spring 2006.

The government is expected to use its share to reduce the federal debt, but has said parliament is free to suggest other ways of spending the money.

swissinfo with agencies

Key facts

Following a decision by the Swiss electorate, gold was uncoupled from its role of supporting the Swiss franc.

Half of the 2,600 tons of gold held by the Swiss National Bank was no longer deemed necessary for monetary purposes.

The use of the gold reserves has been discussed extensively in parliament over the past eight years, but no decision could be reached.