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ZURICH — Although it may take at least two years to become a reality, Jews around the world are applauding a Swiss proposal for a $5 billion humanitarian fund.

In a surprise announcement Wednesday before the Swiss Parliament, President Arnold Koller proposed that his country allocate the $5 billion from its gold reserves to endow a fund to help Holocaust victims and others who have suffered.

The plan is the most dramatic in a series of Swiss steps taken since a push for restitution began a few years ago.

Among the Jewish groups welcoming the proposal was the World Jewish Congress, which has spearheaded efforts to investigate Switzerland's wartime dealings with the Nazis, and to determine the whereabouts of assets deposited by Holocaust victims in Swiss banks during the war years.

"We hail President Koller's announcement as representing a victory for the Jewish and Swiss peoples," said Edgar Bronfman, WJC president.

In a statement issued Wednesday, Bronfman referred to the Swiss contribution to "this historic endeavor" to make "moral and material restitution to those who suffered under Nazi persecution."

In Israel, Avraham Burg, Jewish Agency chairman who has been closely involved in restitution efforts, called the move a step in the right direction.

Rolf Bloch, president of the Federation of Jewish Communities in Switzerland, also welcomed Koller's proposal.

"Why should we not do something bigger than originally planned?" he said. But he cautioned that the road ahead was long, and certain to provoke painful emotions.

The president's proposal, coupled with recent announcements that Swiss banks and private industries would contribute to a separate fund for needy victims, marked the furthest point the European nation has gone in such restitution efforts.

Still, the fund must pass through some formidable legal hoops before it can be established. Those include the need to amend two articles of the Swiss Constitution and to revise the national banking laws, according to Swiss officials.

The proposal could also face a national referendum, which many fear would not pass.

The process is likely to drag out for at least two years, Swiss officials indicated.

In laying the groundwork for the proposal, the Swiss National Bank announced it was contributing $70 million to an already-created Holocaust memorial fund for needy survivors and their heirs.

That fund was established last month with an initial infusion of some $70 million from Switzerland's three largest banks — Credit Suisse, Swiss Bank Corporation and the Union Bank of Switzerland.

The announcement by the Swiss National Bank, which is the equivalent of the U.S. Federal Reserve, was accompanied by statements from several Swiss industrial firms that they would fulfill an earlier pledge to contribute some $50 million to the memorial fund.

As a result of those developments, the memorial fund was expected to increase in value from about $70 million to nearly $200 million.

And while all the money-moving was going on, a group of independent historians met for the first time Wednesday to probe Switzerland's profitable transactions with the Nazis.

In his speech Wednesday before the Swiss Parliament, Koller said the newly endowed Swiss Foundation for Solidarity would use proceeds from the sale of Swiss gold reserves to help people inside and outside Switzerland.

By managing "gold stocks made available for public purposes," the fund could generate proceeds of hundreds of millions of dollars a year, he said.

The money would help "victims of poverty and catastrophes, of genocide and other severe breaches of human rights, such as, of course, victims of the Holocaust," he added.

Koller, who holds the country's rotating presidency until the end of the year, acknowledged that his country had been stung by evidence about the victims' bank accounts, and that the nation had profited in its financial dealings with Nazi Germany.

He said Switzerland had been tainted by the impression that the country "profited and enriched itself thanks to the war, and that for the past 50 years Swiss banks have been trying to hold onto the assets of Holocaust victims."

Koller, who also serves as his country's justice minister, asked his audience to question "to what extent all Swiss citizens managed to satisfy the high moral demands during the war," and "to admit the dark sides of that difficult period."

He also said that because the fund would be based on gold reserves, it would not make use of taxpayer money — a concern raised by conservative politicians in the ongoing debate over compensating Holocaust victims.

Nonetheless, right-wing politician Christoph Blocher, who has fiercely opposed the use of public funds for Holocaust victims, said the federal council "had lost its head."

Koller said the fund would "reinforce Switzerland's humanitarian tradition and prove our gratefulness for having been spared during two world wars."

His speech came in stark contrast to remarks made by his predecessor, Jean-Pascal Delamuraz, who in the course of an interview in late December dismissed Jewish calls for compensation to Holocaust victims as "extortion and blackmail."

Delamuraz later apologized in the face of an international outcry.

In another development Wednesday, the chairman of Credit Suisse, Rainer Gut, said he was willing to seek an out-of-court settlement to resolve pending legal actions by several groups claiming that the bank misappropriated assets of Jewish Holocaust victims.

Gut would not provide details but said he would not exclude the option of a cash settlement.

Earlier this year, Gut was the first major Swiss banking official to urge creation of a fund to begin compensating Holocaust survivors, thereby helping to break an impasse between Switzerland and the international community.