Swiss National Bank
The term Swiss National Bank (SNB) refers to the central bank of Switzerland. Founded in 1906, the SNB is located in Berne and Zurich, with six other offices in the country along with a branch office in Singapore. The central bank acts as an independent body, taking charge of the country's monetary policy and ensuring national price stability.
In this Wiki we will cover the SNB structure, Monetary Policy, Export Policies and more.
Switzerland – Swiss National Bank (SNB)
The SNB is actually a publicly listed company in Switzerland where people can buy and sell their shares. This is quite unique and different from most other central banks.
The Governing Board consists of three governing members and their three deputies. These people are responsible for the operational management of the SNB.
The Bank Council oversees and controls the conduct of business by the National Bank. It consists of 11 members. Six members, including the President and Vice-President, are appointed by the Federal Council, and five by the Shareholders’ Meeting.
The Bank Council sets up four committees from its own ranks: an Audit Committee, a Risk Committee, a Remuneration Committee and an Appointment Committee.
SNB Monetary Policy
The SNB’s monetary policy strategy consists of three elements.
- The SNB states how it defines price stability. This statement changes over time as news and events shape the economy.
- It bases its monetary policy decisions on a medium-term inflation forecast. This can be interpreted as 6 months to 2 years.
- It sets an operational target range for its chosen reference interest rate, which is typically based on the three-month Libor. This means that the SNB uses an interest rate band for their inflation target rather than a specific target rate like most other central banks.
The Swiss National Bank conducts the country’s monetary policy as an independent central bank. It's obligated by the Constitution to act in accordance with the interests of the country as a whole. Its primary goal is to ensure price stability while taking the prevailing economic situation into account. In so doing, it hopes to create a positive environment for economic growth.
The SNB is one of the less active central banks meeting only once every three months. However, if they have something to be concerned about they will meet more frequently.
Switzerland and Exports
Like Japan or the Euro Zone, Switzerland is also very export dependent which means that the SNB does not like seeing its currency become too strong. Therefore, its general bias is to be more conservative with interest rate hikes.
The main thing working against them in this regard is that many investors see the currency and the country as a stable thing to invest in which naturally causes the Swiss Franc to strengthen over time. At the time of this writing, the SNB has not been afraid to push investors away by taking their interest rate into negative territory. This means that they actually charge you for holding Swiss Francs. Currently, in mid 2018, the rate is sitting at -0.75%! Talk about not welcoming investment!