Switzerland loosened its money's gold link in stages.

What the 40% rule actually covered

Switzerland’s gold requirement applied to banknotes issued by the Swiss National Bank, not to every franc in people’s bank accounts or to all the money moving through the economy. The law required the bank to hold gold equal in value to at least 40% of its banknotes in circulation. It was a reserve rule: the gold stood behind part of the central bank’s note issuance, but the requirement did not mean that each note could simply be exchanged for a fixed amount of gold.

That distinction matters because most modern money is not paper cash. Bank deposits are created and managed through the banking system, while the central bank influences financial conditions through its own balance sheet and policy decisions. A rule tied specifically to banknotes could therefore limit the central bank without making every form of money redeemable in gold.

The tradeoff: a reserve anchor versus room to act

Gold gave the franc’s monetary system a tangible reserve anchor. But maintaining a fixed gold share also meant that the National Bank had less freedom to adjust its assets as economic and financial conditions changed. If the value of gold fell relative to the bank’s note liabilities, for example, the bank could need more gold—or a smaller stock of notes—to satisfy the ratio.

Removing the rule shifted the focus from a legally prescribed gold share to the central bank’s broader management of monetary conditions. It did not make the gold disappear overnight, nor did it mean the franc suddenly had no reserves. It removed the requirement that a specified portion of banknotes be matched by gold.

Ending the link

Switzerland changed its constitutional framework in 1999, and the gold-backing requirement was phased out as the new arrangements took effect in 2000. The change reflected a wider move away from systems that formally tied money to a commodity: central banks increasingly relied on policy tools and judgments about prices and economic activity instead.

The memorable detail is how narrow—and consequential—the old rule was. A reserve test applied to banknotes, rather than to every franc, still shaped the choices of one of the world’s most established central banks.