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Swiss reject sweeping overhaul of financial system in closely watched vote

Swiss voters rejected a sweeping overhaul of its banking system in a national referendum, with less than 25% in favor of the proposal, Reuters reported.

Under the plan, only Switzerland's central bank could increase the nation's money supply. Currently, the central bank brings into circulation about 10% of the country's money, the legal tender that exists as notes and coins, according to supporters of the overhaul. The rest is electronic or book money created by banks to finance loans, mortgages and other business needs.

Supporters of the overhaul said change was needed to prevent another financial crisis like the 2008 downturn, adding that an existing deposit protection program was insufficient to pay all banking customers their money. Opponents included the Swiss government, which said the proposal would lead to too much uncertainty.

"Implementing such a scheme, which would have raised so many questions, would have been hardly possible without years of trouble," Reuters quoted Swiss Finance Minister Ueli Maurer as saying.

The referendum was being closely watched because of the debate among economists that has persisted since the global financial crisis over how to bolster the banking system.