An upcoming referendum in the wealthy Alpine nation of Switzerland could be set to dramatically transform the global banking industry.

Swiss voters go to the polls Sunday to decide whether the country should switch to a so-called sovereign money system.

The referendum is attracting international interest because of how it reflects debates held by economists and lawmakers in the aftermath of the 2008 global financial crash.

Supporters of the initiative, known as the “Vollgeld” or the Sovereign Money Initiative (SMI), say approving the measure would make the financial system safer by preventing bankers from recklessly lending and putting people’s savings at risk — again.

That’s because the change would make it much harder for commercial banks to extend credit, effectively creating cash. Instead, the Swiss National Bank (SNB) would become the monopoly provider of Swiss francs.

However, opinion polls indicate SMI will not receive enough votes to pass. Around two-thirds of the Swiss electorate is expected to vote against the plan, which SNB Governor Thomas Jordan has described as a “dangerous cocktail.”

Jordan’s thoughts on the vote were also echoed by UBS Chief Executive Sergio Ermotti last month, as he told reporters: “I don’t expect the Swiss people to be suicidal and approve it.”

Swiss bankers are generally expected to vote “no” in the forthcoming referendum, due to a widely held belief that the measure would threaten their business models, curtail economic growth and put Bern at a competitive disadvantage.

In practice, the initiative would constitute the end of fractional reserve banking — a cornerstone of lending around the world — in which banks “create” money each time they issue a loan.

The introduction of SMI would subsequently force Swiss banks to completely overhaul their current business models, which given the importance of banking to the country, would have a significant impact on its economy.

Around 85 percent of the money in circulation in Switzerland currently is thought to be electronic money created by domestic banks. A situation that proponents of SMI claim is inherently unstable. They propose changing the face of the financial system by ensuring people put their money in risk-free sovereign money accounts. Thereafter, banks would only be allowed to lend money they administer in savings accounts, or what they can get from money markets or the central bank.

The SNB is opposed to the measure, despite supporters of the campaign arguing the central bank should be allowed to re-assume its constitutional role.

Yet, SNB chief Thomas Jordan says the Vollgeld scheme — which has not been tried elsewhere — would constitute a leap into the unknown.

S&P Global Ratings said in a research note published Tuesday that while they do not expect a majority vote for the adoption of the sovereign money system, a “yes” vote could affect the “creditworthiness” of Swiss banks.

“In any case, we would expect the Swiss parliament and the SNB to proceed cautiously to minimize the impact on the Swiss financial and economic system,” S&P Global added.

Switzerland’s political system is designed so that referendums can take place when an issue receives more than 100,000 signatures. It often means radical ideas are put to the test in a national vote.

Over the past year, the country was asked to vote on whether to get rid of television license fees and whether to introduce universal basic income for all citizens. Both ideas were overwhelmingly rejected.

“This vote is very complex … Which means it is also very dangerous because many people do not fully grasp all of its consequences,” Jean-Charles Rochet, professor of banking at the University of Geneva, told CNBC in a phone interview.

“In a world where experts are not listened to, it seems counterproductive to have a political vote on an economic issue,” Rochet said.

Bank shares are widely expected to fall even further if SMI wins enough votes on June 10.

Shares of UBS and Credit Suisse, the two largest banks in Switzerland, tumbled to multi-month lows in May. The lenders were partly reacting to ongoing political uncertainty in Italy and Spain amid fears of market contagion in Europe, while the potential introduction of SMI is seen as likely to further exacerbate their problems.

Nonetheless, the most significant impact of the vote could be felt in currency markets — where the SNB frequently intervenes in order to try to hold down the value of the Swiss franc during heightened market volatility.

“The Swiss Sovereign Money Initiative would, if adopted, generate significant uncertainty, which would be bad for the Swiss economy and the franc,” Paul Wetterwald, chief economist at Indosuez Wealth Management, said in a research note published Friday.

“Generally speaking, the strength of the currency reflects the strength of the economy and the trust shown by the market (and its) people. Ironically, if accepted, the Initiative may help the SNB to weaken the franc by diminishing Switzerland’s safe-haven status,” he added.