According to the estimates of the group of economists, the equity of the SNB may have decreased from approximately CHF 200 billion to CHF 66 billion. Even the distribution of the maximum amount of 6 billion “does not make a significant difference”. Behind the “SNB Observatory” are Basel economics professor Yvan Lengwiler, Geneva professor emeritus Charles Wyplosz and EFG chief economist and former central banker Stefan Gerlach.
In addition, the SNB does not use its foreign investment provisions of approximately 96 billion at the end of 2021 to cover its foreign exchange loss of 132 billion. The report says the decision raises the question of the purpose of these provisions. Despite the loss, the SNB announced that it would increase its foreign exchange reserve provisions by 9.6 billion: “This policy has no economic and financial rationale,” he says.
Probably not paid every year.
As a result, high losses will be taken from the distribution reserve, which will decrease from 102 billion to -39 billion the previous year. This also indicates that there will be no redistributions next year, according to the SNB Observatory.
The massive annual loss reflects a “huge balance sheet” risk for economists. In good years this means big profits and in bad years big losses. At least, the SNB Observatory notes that it allowed the Swiss franc to appreciate because the Central Bank noticed rising inflation earlier than other central banks. “It is reassuring to see that the SNB is focused on price stability, not profitability,” economists said.
Earlier in the week, SNB reported an annual loss of CHF 132 billion according to provisional calculations. The Central Bank said the loss made it impossible to distribute profits to the federal government and the cantons. SNB plans to publish the detailed report on the annual financial statements on March 6, 2023. (SDA)