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The Swiss central bank has a profit of 30.7 billion Swiss francs in the past quarter Realized. The biggest gains were made on foreign exchange reserves, which are largely made up of government bonds and shares. The bank also benefited from an increase in the value of the gold stock and the negative interest rate on bank reserves. The value of the gold reserve increased by almost 900 million, while the value of the foreign exchange reserves increased by 29.3 billion. The negative interest rate that commercial banks pay to the central bank yielded almost 600 million.
The financial results of the Swiss Nationalbank are highly dependent on developments in the capital market, foreign exchange market and gold market. In the first quarter, the stock market recovered, while bonds also increased in value. Due to the higher gold price, the value of the Swiss gold stock also increased by 1,040 tonnes.
Swiss central bank made a profit of 30 billion Swiss francs (Source: SNB)
Since the outbreak of the financial crisis, the Swiss central bank has been buying foreign currency assets on a large scale to suppress the value of its own currency. As a result of these interventions, the balance sheet total has swelled from 200 to 800 billion Swiss francs in ten years. These assets consist of about 80% bonds and 20% shares, most of which are denominated in euros and dollars.
Initially, the bank only bought bonds, but in recent years it has also added more and more shares to its balance sheet. The stock portfolio, which includes shares of Apple, Microsoft, Amazon, Facebook and Google, is now worth more than $100 billion. These stocks have risen sharply in value in recent months due to the global recovery of equity markets.
High-net-worth individuals and investment funds see the Swiss currency as a safe haven, and as a result, the value of the coin began to rise. A strong currency seems to be beneficial for the Swiss consumer, but it also has a number of drawbacks. For example, it is becoming increasingly expensive for tourists to go on holiday to Switzerland. It will also be more difficult for Swiss companies to compete abroad, because their products will become more expensive there.
To discourage a flight to the Swiss franc, the central bank uses a negative deposit rate of -0.75%. This means that banks have to pay 0.75% interest annually on their reserves. They pass these costs on to customers in the form of negative interest rates. This earned the central bank almost 600 million Swiss francs in the first quarter.
The total balance sheet of the Swiss central bank has exploded over the past decade
In recent years, the Swiss central bank has been buying more and more shares
The foreign exchange reserves consist mainly of euros and dollars
