Unlike the year 2021, where the Swiss bank had a profit of 26 billion francs, the Swiss National Bank marks a loss of 132 billion Swiss francs In the financial year 2022. It estimates that it had lost 18% Swiss GDP of 744.5 billion Swiss francs. As a result, the Swiss National Bank decides to refrain from paying regular payouts to the Swiss government, which also affects payouts for its investors.
Foreign currency positions accounted for a loss of 131 billion francs and 1 billion from the Swiss franc position. The Swiss franc has been traded above 1 euro since 2015, when it was quite close with a 1.20 peg against 1 euro. A strong export economy and European inflation helped Swiss businesses resist the loss of GDP.
The Swiss National Bank has raised its interest rates thrice in the year 2022, the percentage of rise in interest is 1%, which is to counter the inflation of 3%, much better in comparison to 10% of European inflation.
Besides the currency value loss, the SNB also witnessed a downfall in its stock prices and bonds. On the other hand, the gold reserves of SNB contributed to a gain of 400 billion francs. Karsten Junius, the chief economist at the Swiss bank, said, “central bank’s losses would not change its monetary policy, and he expected another 100 basis points of hikes, to 2%, this year.”
The Swiss National Bank is likely to be more profitable compared with the ECB (European National Bank) as they can clear off their liabilities at a lower interest rate which is less than the market. On the other hand, the European National Bank needs to recover from its low-yielding bonds and avoid long-term losses.
- Published By Team Timeswire