Thursday, April 30, 2015

Switzerland – The plight of the Fed – Sü

  • The Swiss National Bank has a loss of 30 billion francs for the first quarter of 2015.
  • reason, the high stocks of foreign currencies who built the central bank to weaken the franc.

Why does the Swiss National Bank (SNB) as high losses?

In the financial crisis, many investors bought Swiss francs because they wanted to invest their money safely. For the country that was a big problem: The course of the franc rose enormously. The Federal Reserve tried everything to push him back: She bought securities in foreign currency, printed money – but it did not. The Swiss franc gained more and more of its value. Therefore, the central bank decided in 2011 to a radical step: They stipulated that a Euro had cost at least 1.20 francs – or from a German perspective, a Franken could cost more than 0.83 cents. Alone – it extends naturally to a free foreign exchange market is not simply to announce such limit, they must then also be implemented through purchases and sales. That’s why the Fed threw tons of francs on the market, for which they received foreign currency in return. In January this year, the central bank decided, however, to abandon the limit of CHF 1.20 for one euro. As a result, the price of the franc soared again enormously in height – the high holdings of foreign currencies lost value accordingly. When Euro there were in the first quarter about 13 percent, the dollar two percent.

If the high loss so concluded mainly by the change in the foreign currency investments?

Yes, the losses in this area were even in 41 billion dollars. Since the SNB but in other areas such as the securities are made profits, the total loss was reduced to about 30 billion Swiss francs.

What is the foreign currency investments of the SNB as a whole?

They were the end of the first quarter of approximately CHF 537 billion.

What are the consequences of high loss?

Like the Bundesbank pours the Swiss central bank a potential return to the federal government and the cantons of. If the minus persist until the end of this amount, receives the Public Administration for the year 2015 no money from the SNB. The administration meets the terrible unprepared: Following the sharp rise of the Swiss franc in January had already been predicted that this year by the SNB nothing would be expected. Quite different was the way 2014: Since the Swiss National Bank made another profit of over 38 billion Swiss francs

Will it expects the SNB that it generated a profit

No.? , its task is to ensure the stability of the currency.

Why is it so difficult for Switzerland if the Swiss franc rises?

Because Swiss products beyond the limits drastically more expensive be. You are selling correspondingly heavier, and that weakens the country’s economy. Tourism also suffers because Switzerland has become unattractive as a tourist destination due to the high prices. This way, indirectly also for the Swiss themselves: The rise of the franc makes for the holidays in Switzerland, not more expensive – but travel much more attractive abroad. About go skiing many Swiss now especially after Austria and France -. And not to Gstaad


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