New international rules are not enough to prevent speculative bubbles and world financial crises, believes Sergio Rossi, professor of macroeconomics at the University of Fribourg. According to this specialist in monetary affairs, to stabilise the banking sector there also needs to be structural reforms, like those proposed by the “sovereign money” initiative. He spoke to swissinfo.ch swissinfo.ch: The “sovereign money” initiative proposes a radical reform of the monetary system in Switzerland. Why does the present system need to be changed? Sergio Rossi: The current monetary system allows banks to grant loans without having assets to back them up, even if these loans are for financial activities which do not produce any benefits elsewhere in the economy. When that happens, the monetary supply increases excessively, meaning that there is no increase in the production of goods and services. This creates inflationary pressures, even if these do not have an obvious effect on ...
