Switzerland will hold a referendum to decide whether to ban commercial banks from creating money.

The Swiss federal government confirmed on Thursday that it would hold the plebiscite after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.

The campaign – led by the Swiss Sovereign Money movement and known as the Vollgeld initiative – is designed to limit financial speculation by requiring private banks to hold 100pc reserves against their deposits.

"Banks won't be able to create money for themselves any more, they'll only be able to lend money that they have from savers or other banks," said the campaign group.

Under Switzerland's direct democracy, a referendum can be held if a motion gains 100,000 signatures within 18 months of launching.