Swiss National Bank

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Swiss National Bank
SwissNationalBank.jpg
Founded 1907
Headquarters Zurich, Switzerland
Web site http://www.snb.ch/

The Swiss National Bank conducts the country’s monetary policy as an independent central bank.[1]

In October of 2008, the European Central Bank, the Bank of England and the Swiss National Bank supplied the financial sector with short-term overnight dollar loans in an effort to keep cash flowing in the troubled banking system.[2]

Latest News

On September 6, 2011, the SNB voted to peg the franc at 1.20 to the euro, pledging to buy "unlimited quantities" of foreign currencies to force down its value.[3]

On June 16, 2011, The SNB voted to maintain its key interest rate target at 0.25 percent, releasing statements that Swiss exports and tourism industries are at risk given the strong Swiss franc (versus the dollar and the euro).[4]

On June 10, 2018, Switzerland held a referendum on the Vollgeld, called the "Sovereign Money" Initiative, of which the bank had been a vocal opponent. The initiative, which would have radically changed the Swiss banking system by abolishing Fractional Reserve Banking, was rejected by 75.7% of Swiss voters. Advocates had argued it would stabilize the economy by reducing indebtedness, while critics insisted it would hurt both the Swiss and global economies by making Switzerland unattractive for foreign business and impairing international banks.[5]

Monetary Policy Strategy

The SNB’s monetary policy strategy consists of three elements: the SNB states how it defines price stability; Secondly, it bases its monetary policy decisions on a medium-term inflation forecast. Thirdly, it sets an operational target range for its chosen reference interest rate, the three-month Libor.

History

The SNB was established in 1907. Its first council president was Johnn Daniel Hirter, who was previously the owner of a shipping and coal company and held several political posts in Switzerland.[6]

The national bank celebrated its 100th anniversary on April 27, 2007.[7]

Coordinated Action With Federal Reserve

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced coordinated actions on November 30, 2011 to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.

These central banks agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.

As a contingency measure, the central banks agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant.[8]

Key People

Resources

National Bank Act (serves as the statutory basis for the Bank and its activity)

References

  1. Mandate. SNB.
  2. European Central Banks Offer More Liquidity. International Herald Tribune.
  3. Swiss bid to peg 'safe haven' franc to the euro stuns currency traders. The Guardian (UK).
  4. Swiss National Bank keeps key interest rate target unchanged at 0.25 percent. Washington Post.
  5. Swiss Reject Plan That Would Have Revolutionized Banking. Bloomberg.
  6. Presidents of the Swiss National Bank Council from 1906 onwards. SNB.
  7. SNB's centenary. SNB.
  8. Press Release. FRB.