Swiss National Bank
The SNB is Switzerland's central bank, unique for its massive balance sheet (~100% of GDP), $172B in US equity holdings, publicly traded shares, and the 'safe-haven curse' that forces constant intervention to weaken the franc against its natural appreciation.
SNB demonstrates what happens when a small, trusted institution becomes critical infrastructure for global capital seeking safety: every crisis strengthens the franc, forcing SNB to buy foreign assets indefinitely.
SNB holds $172B in US equities (NVIDIA $11B+, Apple $10B+, Microsoft, Amazon, Meta)—largest non-sovereign holder of many US tech stocks. This is not choice but necessity: CHF acquired through forex interventions must be invested somewhere. 2015 peg removal (1.20 CHF/EUR) announced with NO warning at 9:30am, causing 30% currency move in 45 minutes, killing forex brokers (FXCM bailout, Alpari UK insolvent). SNB is publicly traded (25,300 shares) but dividend capped at CHF 15/share regardless of profits—shareholders have zero upside from CHF 81B profit (2024).
Key Facts
Power Dynamics
Sets interest rates; manages currency; operates payment systems
Completely dependent on franc weakness staying economically acceptable to export industries (71% of GDP). Cannot actually pursue price stability at expense of competitiveness—will always eventually intervene. Safe-haven status is the curse: being trustworthy makes franc strong, which damages exporters
- Export industry political pressure
- Canton dependence on SNB profit distributions
- FINMA handles prudential regulation (split authority)
- Export industries (pharma, watches, machinery)
- Cantons (receive SNB distributions)
- FINMA (bank regulation split)
- ECB (currency dynamics)
Revenue Structure
Swiss National Bank Revenue Sources
- Investment returns on forex reserves 60%
- Interest income 30%
- Other income 10% →
2022: CHF 132B loss (17% of GDP); 2024: CHF 81B profit
Currency revaluation can wipe out years of gains in months. 2022 loss (CHF 132B) was biggest in 116-year history. Cantons depend on distributions; zero payout years force budget revisions. Equity portfolio (tech-heavy) carries massive concentration risk—50% tech correction = $86B loss
Unlike Fed/BoE (can absorb multi-year losses without political crisis), SNB's canton distribution model creates immediate political pressure from losses
Decision Dynamics at Swiss National Bank
2015 peg removal: 9:30am announcement with no warning; 2023 Credit Suisse: CHF 100B liquidity facility in 48 hours
NIRP exit: 8 years of -0.75% rates (2014-2022) before normalization
Federal Council coordination for major moves; forecasting lag (data 4-6 weeks old); political sensitivity to export industry concerns
Failure Modes of Swiss National Bank
- 2015 peg removal: 30% shock destroyed market confidence, killed brokers
- 2022-23 losses: CHF 135B+ combined losses forced zero distributions
- 2008 UBS crisis: had to accept $60B in toxic assets (luckily recovered)
- Safe-haven curse: crises strengthen franc, requiring intervention
- Equity portfolio concentration ($172B, tech-heavy)
- Negative rates ineffective but only tool available
- Export industry dependence makes true independence impossible
Global recession + flight to safety + USD weakness + tech stock collapse = perfect storm. CHF appreciates (need to intervene), USD/EUR weaken (massive position losses), tech collapses ($86B equity loss), cantons demand distributions despite zero profits. Balance sheet could shrink from 100% GDP to 60% in 6 months
Biological Parallel
Switzerland's economy is 0.1% of world GDP, yet SNB decisions move global currency markets and can trigger broker insolvencies worldwide. Like certain keystone predators that are small relative to ecosystem size but exert outsized influence, SNB maintains value through credibility rather than size. But safe-haven status is the trap: the more trusted SNB becomes, the more capital floods in during crises, the more SNB must intervene to weaken the franc, the larger its balance sheet grows, the more exposed to currency volatility. The 2015 peg removal showed the ecosystem shock when SNB withdraws from its role—30% currency move in 45 minutes.
Key Agencies
3 members; makes all monetary policy decisions
11 members; supervisory body elected by shareholders and Federal Council
Manages $172B US equities, $500B+ forex reserves