Swiss National Bank (SNB)

The Swiss National Bank (SNB) issues and manages the supply of Swiss Francs (CHF).

So yes, the SNB is Switzerland’s Central Bank.

The Swiss National Bank (SNB). Pretty, no?

Since the CHF is one of the eight majors (most traded currencies), you should have an idea of how the SNB is structured, and what its mandate is.

Let’s dive in.

Swiss National Bank's Mandate

According to the SNB’s official website its mandate is:

“…to ensure price stability, while taking due account of economic developments…”

This means the Swiss National Bank is mostly concerned about inflation.

Here we go again…

However, like we’ve seen with the ECB and the BoE (which have the same inflation-focused mandate), prices are not all that matters.

What do I mean by this?

Look at the phrase: “while taking due account of economic developments”.

What this phrase encapsulates is how the Central Bank has to consider the consequences of its rate decisions on growth.


Lower rates, the economy speeds up (more growth).

Higher rates, the economy slows down (less growth, in some cases, even a recession).

So if inflation is getting out of hand, and the SNB only truly cared about price stability, then it would hike rates do curb inflation…

But in doing so, it would slow down the economy.

And if the economy was slow to begin with…

You can see where that would take us, no?

Interest Rate decisions are a tug of war between inflation and growth.

This is why most Central Banks, even if they only have the mandate of price stability (keep inflation in check -close to their target), will pay attention to growth.

And in many cases, the banks will also pay attention to the labor market.


Higher employment (lower unemployment) usually leads to higher inflation.

And of course, other banks, such as the Reserve Bank of Australia (RBA) must, by mandate, strive for a strong and healthy labor market.

But going back to basics, the Swiss National Bank cares about inflation.

SNB's Structure

The SNB is an autonomous Central Bank (it doesn’t have to do what the Central government wants it to do).

Monetary policy decisions are made by the Governing Board.

This Board is composed of only three members.

That’s right.

Three people decide the monetary policy of Switzerland, and thus, the fate of the Swiss Franc (CHF).

At the SNB, only three decide the currency’s path.

This means keeping up with their dovish or hawkish leanings is much more easy to do.

Now, the not so good part…

The Governing Board only meets four times a year to decide on monetary policy.

Yep, that’s right.

You will only get four chances to make solid pips off scheduled rate decisions throughout the year (for the SNB).

While that sounds sucky (it is!), the Swiss National Bank is known for surprising the markets with sudden announcements.

So, as long as you stay tuned to what’s going on in the markets, you should be able to reap any surprise benefits.

And boy, nothing moves the markets like a solid surprise.

FX and the SNB

The only extra-important thing we haven’t mentioned yet has more to do with the CHF than the Swiss National Bank itself.

The Swiss Franc (CHF) is often used as a safe haven currency.

This means, that in moments of uncertainty (geopolitical events, crises, etc.) investors and traders will liquidate their positions in risky assets (stocks, etc.).

And what happens after the selloff of risky assets?

Money flows into safe haven assets.

For many, the Swiss Franc is as safe as gold.

When it comes to currencies, both JPY and CHF are seen as safe havens.

This means both JPY and CHF will gain temporarily.

The duration of safe haven flows usually a day or less, but it can vary wildly, with some even lasting more than a week.

When this happens, the best thing to do is go with the flow, and keep an eye out in case the markets decide to reinvest in risky assets.

Thus, lowering CHF back again.

And that’s all for now.

See you soon,

Emil Christopher,

The Forex Economist

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