The crimson stock market year cost some investors a lot of money – but probably none as much as the Swiss National Bank (SNB): 132 billion francs, according to the Central Bank’s provisional calculations.
SNB Chairman Thomas Jordan (59) should record a historic loss. Blick answers the most important questions about the big minus.
How did the billion-dollar SNB loss come about?
SNB owns a huge foreign currency, most recently CHF 800 billion. If the Swiss franc appreciates against foreign currencies, those currency mountains will lose value and the SNB will lose. Especially weakening euro in 2022 proved fatal for SNB.
In addition to exchange rates, capital markets also affect the outcome of the SNB. SNB investment has also been on the decline since stock markets around the world fell sharply last year.
Finally, the gold price has a decisive influence on the SNB outcome. After all, things were going well for the Central Bank here: Gold holdings are CHF 0.4 billion more than a year ago.
What does the record loss mean for the federal government and the cantons?
You will not receive a payment. The SNB distributes six billion francs a year, two-thirds to the Confederation and one-third to the cantons. Those six billion are now missing. While this was obvious, many cantonal and federal governments had budgeted at least some of the money. For example, the canton of Bern expected CHF 320 million from the SNB. This money is lost and could bring a dark red result instead of a black zero to the canton.
The last time the Confederation and cantons had to give up SNB distribution in 2013. It is particularly sad that the confederation and cantons have to give up SNB funds now that economic prospects are no longer so rosy. Fear of a recession is spreading, tax revenues are unlikely to flow spectacularly right now and plug the SNB hole.
What does loss mean to me personally?
The loss has no direct effect. However, indirectly, the dark red result can be noticed. For example, in the canton of Bern, the tax cuts planned for 2024 for natural and legal persons could be jeopardized if the SNB does not receive millions. In addition, the cantonal government encourages its officials to take a critical look at the expenditures in the current year. Other cantons are likely to act similarly to avoid red slip due to lack of SNB funds.
Could SNB go bankrupt if it continues to make losses?
no “The loss need not worry you at all,” emphasizes monetary policy expert Fabio Canetg (34). He even thinks the SNB is right not to try to make a profit: “It’s their job to keep inflation low. He did it.” The annual increase in 2022 was 2.8 percent in Switzerland and therefore significantly lower than abroad.
In addition, SNB still has equity of around 65 billion francs even after its record loss. “You can even have negative capital for years,” Canetg explains. “This does not affect their ability to move.”
However, if a central bank’s equity remains in the red line for a long time, it will damage its reputation in the markets. SNB will do its best to avoid this.
Will SNB make a profit again in the new year?
Predictions are difficult because the development of the stock markets, the price of gold and the Swiss franc have a great influence. In any case, the federal government and the cantons are unlikely to expect maximum distribution again within a year. To do this, the SNB must first replenish its distribution reserve.