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|Headquarters||Bern and Zurich|
|Established||16 January 1906 – 20 June 1907|
|Central bank of||Switzerland|
|Currency|| Swiss Franc |
CHF (ISO 4217)
The Swiss National Bank (SNB) is the central bank of Switzerland, and is therefore responsible for the monetary policy of the nation of Switzerland and also for the issuing of Swiss franc banknotes.
A central bank, reserve bank, or monetary authority is the institution that manages the currency, money supply, and interest rates of a state or formal monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and also generally controls the printing/coining of the national currency, which serves as the state's legal tender. A central bank also acts as a lender of last resort to the banking sector during times of financial crisis. Most central banks also have supervisory and regulatory powers to ensure the solvency of member institutions, to prevent bank runs, and to discourage reckless or fraudulent behavior by member banks.
Switzerland, officially the Swiss Confederation, is a sovereign state situated in the confluence of western, central, and southern Europe. It is a federal republic composed of 26 cantons, with federal authorities seated in Bern. Switzerland is a landlocked country bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. It is geographically divided between the Alps, the Swiss Plateau and the Jura, spanning a total area of 41,285 km2 (15,940 sq mi). While the Alps occupy the greater part of the territory, the Swiss population of approximately 8.5 million is concentrated mostly on the plateau, where the largest cities are located, among them the two global cities and economic centres of Zürich and Geneva.
Monetary policy is the process by which the monetary authority of a country, typically the central bank or currency board, controls either the cost of very short-term borrowing or the money supply, often targeting inflation or the interest rate to ensure price stability and general trust in the currency.
The bank is otherwise known as: German : Schweizerische Nationalbank; French : Banque nationale suisse; Italian : Banca nazionale svizzera; Romansh : Banca naziunala svizra, which are the four official languages of the country.
German is a West Germanic language that is mainly spoken in Central Europe. It is the most widely spoken and official or co-official language in Germany, Austria, Switzerland, South Tyrol in Italy, the German-speaking Community of Belgium, and Liechtenstein. It is also one of the three official languages of Luxembourg and a co-official language in the Opole Voivodeship in Poland. The languages which are most similar to German are the other members of the West Germanic language branch: Afrikaans, Dutch, English, the Frisian languages, Low German/Low Saxon, Luxembourgish, and Yiddish. There are also strong similarities in vocabulary with Danish, Norwegian and Swedish, although those belong to the North Germanic group. German is the second most widely spoken Germanic language, after English.
French is a Romance language of the Indo-European family. It descended from the Vulgar Latin of the Roman Empire, as did all Romance languages. French evolved from Gallo-Romance, the spoken Latin in Gaul, and more specifically in Northern Gaul. Its closest relatives are the other langues d'oïl—languages historically spoken in northern France and in southern Belgium, which French (Francien) has largely supplanted. French was also influenced by native Celtic languages of Northern Roman Gaul like Gallia Belgica and by the (Germanic) Frankish language of the post-Roman Frankish invaders. Today, owing to France's past overseas expansion, there are numerous French-based creole languages, most notably Haitian Creole. A French-speaking person or nation may be referred to as Francophone in both English and French.
Italian is a Romance language of the Indo-European language family. Italian descended from the Vulgar Latin of the Roman Empire, and together with Sardinian, is by most measures the closest language to it of the Romance languages. Italian is an official language in Italy, Switzerland, San Marino and Vatican City. It has an official minority status in western Istria. It formerly had official status in Albania, Malta, Monaco, Montenegro (Kotor) and Greece, and is generally understood in Corsica and Savoie. It also used to be an official language in the former Italian East Africa and Italian North Africa, where it still plays a significant role in various sectors. Italian is also spoken by large expatriate communities in the Americas and Australia. Italian is included under the languages covered by the European Charter for Regional or Minority languages in Bosnia and Herzegovina and in Romania, although Italian is neither a co-official nor a regional or a traditional language in these countries, where Italians do not represent a historical minority. In the case of Romania, Italian is listed by the Government along 10 other languages which supposedly receive a "general protection", but not between those which should be granted an "advanced or enhanced" one. Many speakers of Italian are native bilinguals of both Italian and other regional languages.
The SNB is an aktiengesellschaft under special regulations, and has two head offices, one is in Bern and the other one in Zurich.
Aktiengesellschaft is a German word for a corporation limited by share ownership whose shares may be traded on a stock market. The term is used in Germany, Austria, Switzerland, and South Tyrol for companies incorporated there. It is also used in Luxembourg, although the equivalent French language term société anonyme is more common. In the United Kingdom and the United States, the equivalent terms are "limited" and "incorporated", respectively.
The bank formed as a result of the need for a reduction in the number of banks of issue, which numbered 53 sometime after 1826. In the 1874 revision of the Federal Constitution it was given the task to oversee laws concerning the issuing of banknotes. Then in 1891 the Federal Constitution was revised again to entrust the Confederation with sole rights to issue banknotes. The National Bank Law was enforced on 16 January 1906, and the Nationalbank began business activities on 20 June 1907, and is thought then founded sometime during either 1906 or 1907.SNB itself states that it was founded in 1907.
Sometime during World War I (1914-1917), the bank was instructed to release notes of a small denomination, for the first time, by the Federal Council of Switzerland.
World War I, also known as the First World War or the Great War, was a global war originating in Europe that lasted from 28 July 1914 to 11 November 1918. Contemporaneously described as "the war to end all wars", it led to the mobilisation of more than 70 million military personnel, including 60 million Europeans, making it one of the largest wars in history. It is also one of the deadliest conflicts in history, with an estimated nine million combatants and seven million civilian deaths as a direct result of the war, while resulting genocides and the 1918 influenza pandemic caused another 50 to 100 million deaths worldwide.
The Bundesrat devalued the Swiss Franc during 1936, and as a result, there was made available to the Nationalbank, an amount of monies, which the bank subsequently stored in a Währungsausgleichsfonds reserve for the future, for usage in situations of emergency.
The Federal Council is the seven-member executive council that constitutes the federal government of the Swiss Confederation and serves as the collective head of state and of government of Switzerland.
In 1981 the bank participated in research involving Orell Füssli and an optical research group named Landis and Gyr, of matters of banknote design.
During 1994 the Bank was described as a joint-stock company acting under the administration and supervision of the Confederation. It had eight branches and twenty sub-branches within cantons. The governing board had overall executive management of the Nationalbank, with supervision entrusted to its shareholders, the banks' council, the banks' committee, its local committees and auditing committee. There were three members of the governing board, who together decided the monetary policy of the Nationalbank. Towards the end of 1993, there were 566 employees.
With the inception of Article 99 of the Federal Constitution, in May 2004, the Nationalbank achieved formal independence.
As of 2015 the Nationalbank is privately owned,with the majority of shares belonging to the Swiss cantons (45%) and the banks of the cantons (15%), and the smaller remainder in the possession of private individuals (40%). Shares of the SNB existed within SIX Swiss Exchange from 1907 onward.
The Nationalbank made an announcement on 6 September 2011, of its intention to address changes in the value of the Swiss Franc to the Euro. More specifically, that it wanted the value of the Franc to fall below 1.2 to the Euro. A cap was placed on exchange-ratesin order to take measures to stem the development of a possible recession. The bank stated the 1.2 exchange value was defendable as the bank could potentially proceed to mint enough banknotes to control the rate sufficiently. The bank announced on January 15, 2015 the Euro currency arrangement would end as the Euro crisis had passed and the Europeans would be making financial policy changes.
The basic governing principles of the Nationalbank are contained within Article 99 of the Federal Constitution, which deals with matters of monetary policy.There are three numbered factors concerning principles explicitly mentioning the Nationalbank, of four altogether shown within the Article. The SNB is therefore obliged by constitutional statute law to act in accordance with the economic interests of Switzerland. Accordingly, the prime function of the Nationalbank is:
to pursue a reliable monetary policy for the benefit of the Swiss economy and the Swiss people.
The Nationalbank publishes within its own site a list of research done as work in progress by staff members, which begin at 2004 (2 papers), to 2005 (2), 2006 (11), 2007 (17), 2008 (19), 2009 (16), 2010 (19), 2011 (14), 2012 (16), 2013 (11), 2014 (13), and to 1 August 2015 there is shown nine papers,a list of eight economic studies which relate to the tasks of the bank, listed from 2005, in addition to a bi-annually published update of research, listed from 2012 to the present.
The National Bank is entrusted with the note-issuing privilege. It supplies the economy with banknotes that meet high standards with respect to quality and security. It is also charged by the Confederation with the task of coin distribution.
In the field of cashless payment transactions, the National Bank provides services for payments between banks. These are settled in the Swiss Interbank Clearing (SIC) system via sight deposit accounts held with the National Bank.
The National Bank manages currency reserves. These engender confidence in the Swiss franc, help to prevent and overcome crises and may be utilized for interventions in the foreign exchange market.
The National Bank contributes to the stability of the financial system by acting as an arbiter over monetary policy. Within the context of this task, it analyses sources of risk to the financial system, oversees systemically important payment and securities settlement systems and helps to promote an operational environment for the financial sector.
Together with the federal authorities, the National Bank participates in international monetary cooperation and provides technical assistance.
The National Bank acts as banker to the Swiss Confederation. It processes payments on behalf of the Confederation, issues money market debt register claims and bonds, handles the safekeeping of securities and carries out money market and foreign exchange transactions.
The National Bank compiles statistical data on banks and financial markets, the balance of payments, the international investment position and the Swiss financial accounts.
The Swiss National Bank invests its assets, particularly in the stock market. In 2018, its share portfolio stood at 153 billion Swiss francs.
According to its guidelines, it "avoids shares in companies which produce internationally banned weapons, seriously violate fundamental human rights or systematically cause severe environmental damage".
Since 2016, environmental associations and academics criticise the fact that these investments do not take into account the Paris Climate Agreement (article 2) and are responsible for at least 50 million tons of carbon dioxide emissions in 2017.
The Swiss National Bank pursues a monetary policy serving the interests of the country as a whole. It must ensure price stability, while taking due account of economic developments. Monetary policy affects production and prices with a considerable time lag. Consequently, it is based on inflation forecasts rather than current inflation.
The SNB’s monetary policy strategy consists of three elements: a definition of price stability (the SNB equates price stability with a rise in the national consumer price index of less than 2% per year), a medium-term conditional inflation forecast, and, at operational level, a target range for a reference interest rate, which is the Libor for three-month investments in Swiss francs.
The General Meeting of Shareholders is held once a year, as a rule in April. Owing to the SNB’s public mandate, the powers of the Shareholders’ Meeting are not as extensive as in joint-stock companies under private law.
The Bank Council oversees and controls the conduct of business by the Swiss National Bank and consists of 11 members. Six members, including the President and Vice President, are appointed by the Federal Council, and five by the Shareholders’ Meeting. The Bank Council sets up four committees from its own ranks: an Audit Committee, a Risk Committee, a Remuneration Committee and an Appointment Committee.
A list of the Bank Council members is published on the SNB website (see: http://www.snb.ch/en/iabout/snb/bodies/id/snb_bodies_council)
The Swiss National Bank’s management and executive body is the Governing Board. The Governing Board is responsible in particular for monetary policy, asset management strategy, contributing to the stability of the financial system and international monetary cooperation. The Governing Board consists of 3 members:
The SNB manages the official gold reserves of Switzerland, which as of 2008 amount to 1145 tonnes and are valued at 30.5 billion CHF.The gold is believed to be stored in huge vaults beneath the Federal Square ( Bundesplatz ) to the north of the federal Parliament building in Bern, but the SNB treats the location of the gold reserves as a secret. Independent confirmation of the gold's location was obtained by the Bernese newspaper Der Bund in 2008. It published a photograph of the bullion that a keystone photographer was allowed to take at the SNB premises in Bern in 2001. Der Bund also quoted a retired official of the city's surveying office as saying that the gold vaults take up an area of roughly half the Federal Square and have a depth of dozens of meters, down to the level of the Aar river. The SNB says that the gold reserves are stored in different safe places in Switzerland (70% -mostly under the Bundesplatz in Berne and at the Bank for International Settlements in Basel) and abroad (i.e. Bank of England and Bank of Canada).
From the latter years of the 1990s until sometime during 2005, the Nationalbank transferred from its possession (incompetently, when the gold price was at its historic low)half of its gold reserves, following the Nazi gold affair.
The Swiss National Bank provided 1.2 billion CHF to the Reichsbank, of this, a value of approximately 780 million CHF of the gold given to the Nationalbank was gold which had been looted by the forces of Germany. In addition the Nationalbank also exchanged between 1.2–1.6 billion CHF for gold from the Allied forces.During 20 April 1944, gold from the gold reserves of Italy arrived from Como at the railway station within Chiasso.
There is controversy over the role of the Swiss National Bank in the transfer of Nazi gold during World War II. The SNB was the largest gold distribution centre in continental Europe before the war. A study by the U.S. Department of State in 1997 notes that the Bank "must have known that some portion of the gold it was receiving from the Reichsbank was looted from occupied countries". [ citation needed ] The gold from Nazi governship sources was in the form of ingots containing gold looted from Central Banks of Europe and gold from Jews executed within the concentration camps established by the machination of the Nazi regime, which the SNB took without knowing these facts at the time, nor inquiring to any great degree in the process of its transfer into the possession of the SNB, according to a former Archivist of the SNB Robert Vogler.This was confirmed by the Swiss Bergier commission in 1998 which concluded that the SNB received US$440 million in gold from Nazi sources, of which US$316 million is estimated to have been looted.
The Nationalbank had profits of $39.3 billion at the close of 2014.
On 31 July 2015, the bank reported a first-half loss of £33 billion.
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The franc (₣) is the name of several currency units. The French franc was the currency of France until the euro was adopted in 1999. The Swiss franc is a major world currency today due to the prominence of Swiss financial institutions. The name is said to derive from the Latin inscription francorum rex used on early French coins and until the 18th century, or from the French franc, meaning "frank".
The Bank for International Settlements (BIS) is an international financial institution owned by central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work through its meetings, programmes and through the Basel Process – hosting international groups pursuing global financial stability and facilitating their interaction. It also provides banking services, but only to central banks and other international organizations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.
Seigniorage, also spelled seignorage or seigneurage, is the difference between the value of money and the cost to produce and distribute it. The term can be applied in two ways:
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. The Swiss National Bank (SNB) issues banknotes and the federal mint Swissmint issues coins.
An open market operation (OMO) is an activity by a central bank to give liquidity in its currency to a bank or a group of banks. The central bank can either buy or sell government bonds in the open market or, in what is now mostly the preferred solution, enter into a repo or secured lending transaction with a commercial bank: the central bank gives the money as a deposit for a defined period and synchronously takes an eligible asset as collateral. A central bank uses OMO as the primary means of implementing monetary policy. The usual aim of open market operations is—aside from supplying commercial banks with liquidity and sometimes taking surplus liquidity from commercial banks—to manipulate the short-term interest rate and the supply of base money in an economy, and thus indirectly control the total money supply, in effect expanding money or contracting the money supply. This involves meeting the demand of base money at the target interest rate by buying and selling government securities, or other financial instruments. Monetary targets, such as inflation, interest rates, or exchange rates, are used to guide this implementation.
Foreign-exchange reserves is money or other assets held by a central bank or other monetary authority so that it can pay its liabilities if needed, such as the currency issued by the central bank, as well as the various bank reserves deposited with the central bank by the government and other financial institutions. Reserves are held in one or more reserve currencies, mostly the United States dollar and to a lesser extent the Euro.
The Oesterreichische Nationalbank (OeNB) is the central bank of Austria and, as such, an integral part of both the European System of Central Banks (ESCB) and the Eurozone. In the public interest, the Oesterreichische Nationalbank contributes to monetary and economic policy decision-making in Austria and in the Euro area. In line with the Federal Act on the Oesterreichische Nationalbank, the OeNB is a stock corporation. Given its status as a central bank, it is, however, governed by a number of special provisions, as laid down in the Nationalbank Act. The OeNB's capital totals EUR 12 million and is held by a sole shareholder, the federal government. The shareholder rights of the federal government are exercised by the Minister of Finance. Since May 2010 this capital is entirely held by the Austrian state. Previously half of the capital was in the hands of employer and employee organizations as well as banks and insurance corporations.
The National Bank of Belgium has been the central bank of Belgium since 1850. The National Bank of Belgium was established with 100% private capital by a law of 5 May 1850 as a Société Anonyme (SA). It is a member of the European System of Central Banks.
Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.
The Belgian franc was the currency of the Kingdom of Belgium from 1832 until 2002 when the Euro was introduced. It was subdivided into 100 subunits, known as centiemen (Dutch), centimes (French) or Centime (German).
Nazi gold is gold allegedly transferred by Nazi Germany to overseas banks during World War II. The regime is believed to have executed a policy of looting the assets of its victims to finance the war, collecting the looted assets in central depositories. The occasional transfer of gold in return for currency took place in collusion with many individual collaborative institutions. The precise identities of those institutions, as well as the exact extent of the transactions, remain unclear.
The Eurosystem is the monetary authority of the eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The ECB has, under Article 16 of its Statute, the exclusive right to authorise the issuance of euro banknotes. Member states can issue euro coins, but the amount must be authorised by the ECB beforehand.
The Nixon shock was a series of economic measures undertaken by United States President Richard Nixon in 1971, in response to increasing inflation, the most significant of which were wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold.
Banknotes of the Swiss franc are issued by the Swiss National Bank in denominations of 10, 20, 50, 100, 200 and 1,000 Swiss francs.
Currency intervention, also known as foreign exchange market intervention or currency manipulation, is a monetary policy operation. It occurs when a government or central bank buys or sells foreign currency in exchange for their own domestic currency, generally with the intention of influencing the exchange rate and trade policy.
Philipp Michael Hildebrand is a Swiss banker. He was head of the Swiss central bank, the Swiss National Bank (SNB) from 2010 until he resigned on 9 January 2012 after controversy surrounding his wife's currency trading.
SARON stands for Swiss Average Rate Overnight and represents the overnight interest rate of the secured funding market for the Swiss Franc (CHF). is an overnight interest rates average referencing the Swiss Franc CHF. It is based on transactions and quotes posted in the Swiss repo market. SARON is administered by SIX.
Ten referendums were held in Switzerland during 1999. The first four were held on 7 February on changes to the eligibility for membership of the Federal Council (approved), constitutional regulations on organ transplantation (approved), a popular initiative "house ownership for everyone" (rejected) and an amendment to the federal law on spatial planning (approved). The fifth was held on 18 April on a new Swiss Federal Constitution, which was approved.
The National Bank of Liechtenstein is a bank located in Liechtenstein, based in the capital city Vaduz. Since 1993 it has been listed as a company at the Swiss Stock Exchange, with the majority of shares (57.5%) owned by the Liechtenstein state. As the state is in a customs and monetary union with Switzerland and have adopted the Swiss franc as official currency, the monetary policy and money supply is the sole responsibility of the Swiss National Bank.
The Swiss sovereign money initiative of June 2018, also known as Vollgeld, was a citizens' (popular) initiative in Switzerland intended to give the Swiss National Bank the sole authority to create money.