The Swiss Franc
History of the Swiss Franc
• The Swiss Franc is the
official currency of
Switzerland and
Lichtenstein. It is also
accepted as legal
tender in Italy
• The Franc is the 5th
most traded currency in
the world
• Official Swiss currency
created in 1850
• The Franc is the world
currency most linked to
the price of gold.
Symbols and Nicknames
ISO Symbol = CHF
• Franc
• Swissie
The Swiss National Bank
• established in 1907
• Is an
Aktiengesellschaft
This means the SNB
is a publically traded
company
• Manages the official
gold reserves of the
Swiss government
Swiss gold reserves
• The gold is believed
to be stored in huge
vaults beneath the
Federal Square to
the north of the
federal Parliament
building in Berne,
but the SNB treats
the location of the
gold reserves as a
secret.
Swiss National Bank
• Independent bank
looking to make a profit
• Dual Mandate
– Price Stability
– Economic Growth
• 11 members of the
bank council (6
appointed by the
government, 5 by
shareholders)
• Meets once a quarter
to determine Swiss
monetary policy (3
month LIBOR)
Hansueli Raggenbass
Switzerland’s Economic
Reports
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GDP reports
Employment level (monthly)
Retail Sales
CPI & PPI
Consumption Indicator
Most Traded Pairs
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USD/CHF
EUR/CHF
GBP/CHF
CHF/JPY
How to trade the Franc
•
Stability of Country
– The Franc seems to have lost its status of
safety as they have moved away from the
gold standard. Tends to trade with the Euro
but will also move with the price of gold
•
Interest Rate Outlook
– Currently, the Franc carries an extremely
low interest rate in the world
•
Inflation Outlook
– The Swiss National Bank has started
Quantitative easing and has stated no worry
of inflation
•
Trade Deficits
– The Franc traditionally carries minimal trade
deficits with foreign countries
•
Economic Activity
– Varies with GDP reports
– Stock Index: SMI 20