Swiss National Bank Posts Biggest Loss in its History

WISCONSIN (CoinChapter.com) — For only the second time in 116 years, Switzerland’s government will not receive a payout from the Swiss National Bank (SNB) – and the reason: the SNB posted its biggest loss in history at 132 billion Swiss francs (or $143 billion) in 2022.

The loss was a dramatic turnaround from a 26 billion franc gain in 2021. Declining stocks and fixed-income markets weighed on the value of the SNB’s bond and share portfolios.

The totality of SNB losses almost wholly stems from foreign currency transactions held; forex positions totaled 131 billion francs.

The other billion were held with investments in the Swiss franc. The bank purposely tried to weaken the franc to fight inflation. As a result, bond and stock markets around the world raised interest rates, but many are still amid significant recession concerns.

SNBs One Positive Was Gold Holdings

Forex markets may not have been favorable to the SNB, but gold shone in a big way. The bank’s gold investments totaled 1,040 tonnes at the end of 2021 and gained 400 million francs last year.

Although the bank took such a big loss, it will not change monetary policy; there were three interest rate hikes in 2022. Historically, Switzerland tries to keep franc value restrained due to its export-heavy economy

Switzerland Inflation Rate

Last December, the SNB raised interest rates to 1%. Many nations are struggling with high inflation, yet Switzerland considers its national rate of 2.8% too high, which is nothing compared to the Euro Zone’s current inflation rate of 9.2%.

Switzerland needs time to revamp its valuation reserves.

The good news for the SNB is that it will take much less time than the European Central Bank (ECB) to reach its goal. Both central banks are technically profitable, but the SNB will earn better market interest as the ECB is presently trapped in low-yielding bonds, which will not provide profits for many years.