CHILDREN are sometimes reassured that new siblings arrive via friendly storks. The reality is messier. Money creation is much the same. The “stork” in this case is the central bank; many think it transfers money to private banks, which act as intermediaries, pushing the money around the economy. In reality, most money is created by private banks. They generate deposits every time they make a loan, a process central banks can influence but not control. That alarms some, who worry that banks use this power heedlessly, thereby stoking disruptive booms and busts. Campaigners in many rich countries want to strip private banks of the power to create money. In Switzerland members of the “Vollgeld Initiative” presented the government with enough signatures in December to trigger a national referendum on the subject. Bank deposits, they point out, make up some 87% of the readily available money in Switzerland, vastly exceeding notes and coins. Since money creation is the main fuel of both inflation and growth, they argue, it should not be in private hands, let alone entrusted to institutions that are prone to binge and purge.

Under the existing system deposits sit on private banks’ balance-sheets. Under the proposed alternative (a variation on “narrow banking”), accounts would be transformed into something much closer to the safe-deposit boxes nestled in Swiss vaults. Customers would pay the banks a charge for storing their cash. Any loans banks make would have to be funded by shareholders or by borrowing of their own, not by deposits.

The central bank, meanwhile, would survey the economy and judge how much cash was required to maintain stable inflation. Rather than tweaking interest rates to influence private banks’ lending, it would simply hand out (or siphon away) the necessary cash itself, to the government, the public, or as loans to private banks.

The system would be safer for depositors, since banks could not lend out and lose their money. That would allow governments to withdraw the implicit protection banks currently enjoy as the guardian of voters’ deposits. Even big banks could be allowed to fail, since the losses would not reverberate through the system so much. That possibility would nudge lenders into behaving more prudently.

The Swiss government responds officially to every issue to be put to a referendum. On February 24th it released its verdict on the Vollgeld Initiative (the actual vote will not take place until next year at the earliest). It is not a fan. As the central bank issued more money, the government points out, its liabilities (cash) would rise without any increase in its assets. This, the government fears, would undermine confidence in the value of money.

Those hoping for a simpler, more streamlined system would probably be disappointed. There would need to be heavy-handed rules to make sure that banks did not create “money-like” instruments. The government also worries that the change would hobble Swiss banks, including multinational giants such as UBS and Credit Suisse, which would face mammoth restructuring costs. Finance, a huge part of the Swiss economy, would be turned inside-out, with unpredictable but probably expensive consequences.

The government also points out that the initiative only guards against one particular form of financial instability. Even once the new system is in place, a bank could still become insolvent or suffer a liquidity squeeze, with potentially disastrous results for those that had backed it and the economy as a whole. Even though it did not accept retail deposits, Lehman Brothers still collapsed, and nearly brought down the global financial system as it did so. Given the limited benefits, the costs the reform would involve look prohibitive, opponents argue.

Besides, “there are less radical means to achieve financial stability,” according to Serge Gaillard, director of Switzerland’s Federal Finance Administration. Rules on lending, reserves and capital have all been tightened since the crisis. Now that these reforms have been implemented, the government says, such a fundamental overhaul of the system is unnecessary, if not downright dangerous.

Safe-deposit boxes may be popular in Switzerland, but the public will probably side with the government, disappointing radical economists hoping for a trailblazer to prove that the model can work. The Swiss authorities believe they have recommended the safer option. Campaigners will think them narrow-minded.