The Swiss central bank suffers the largest losses due to the strong Swiss franc
The Swiss central bank suffered a historic financial loss in the fiscal year 2022, with the strength of the franc and the losses of global stock exchanges.
Preliminary data from the Swiss Central Bank revealed a loss of 132 billion Swiss francs ($143 billion) for the 2022 fiscal year.
This represents the largest loss in the central bank’s entire 116-year history, and is equivalent to nearly 18% of Switzerland’s projected GDP of 744.5 billion Swiss francs.
Its previous record loss was CHF23 billion in 2015.
As a result, the bank won’t make its usual payments to the Swiss government, with payments to its shareholders affected.
In 2021, the bank announced a profit of CHF26 billion.
Among the losses, 131 billion Swiss francs came from foreign currency and 1 billion Swiss francs, with the franc rising, as investors flocked to it as a safe haven amid European volatility.
Since mid-2022, the Swiss franc has traded above the euro, a level it had only touched before for a brief period in 2015 after it was unpegged from the European Union’s single currency, and the franc was trading at 1.20 Euros temporarily.
Switzerland has historically tried to rein in the strength of the franc due to its export-driven economy, although analysts have argued that Swiss companies have managed to remain competitive despite the franc’s appreciation due to inflation in the Eurozone.
Last month, the Swiss National Bank raised interest rates for the third time in 2022, to 1%, to counter inflation of 3%, which is well below the inflation rate in the Eurozone, which is still around 10%.
The Swiss National Bank was also affected last year by losses in its stock and bond portfolio amid the broader market downturn.
However, he gained 400 million Swiss francs through his gold holdings.