Swiss National Bank (SNB): the Swiss franc's central bank

The Schweizerische Nationalbank (English: Swiss National Bank) is Switzerland's central bank. It manages the Swiss franc (CHF), one of the 3 global safe-haven currencies along with Japanese yen and US dollar.

Specifics: - Only 4 meetings per year (March, June, September, December) — lowest frequency in G10 - Decisions communicated Thursday at 9:30am (Swiss time = same as Paris) - Only three directorate members: Martin Schlegel (chairman since October 2024), Antoine Martin (vice-chairman), Petra Tschudin - Mandate: price stability (0-2 % inflation target, broader than ECB/Fed 2 %) - Main tool: policy rate AND direct forex interventions (buying/selling CHF for EUR/USD)

In 2026, SNB policy rate is -0.25 % (negative territory rare globally, especially since BoJ normalized). SNB has become the last G10 central bank in negative territory.

On January 15, 2015 at 10:30am Swiss time, the SNB made the most brutal announcement in modern forex history: it abandoned the EUR/CHF 1.20 peg it had been defending since September 6, 2011.

Immediate consequences in 30 minutes: - EUR/CHF went from 1.20 to 0.85 (-30 %) - USD/CHF went from 1.02 to 0.75 (-26 %) - Several retail brokers went bankrupt (Alpari UK liquidated, FXCM saved last-minute by $300M emergency) - Thousands of retail accounts closed at huge losses (negative balance of -€50,000 for some) - Global crash on all CHF-funded assets

Why this decision? SNB defended the peg by buying €50-100B/month for CHF, ballooning its balance to CHF 600B (equivalent to 100 % of Swiss GDP!). With imminent ECB QE (Draghi, March 2015), maintaining the peg would have become even costlier. SNB chose to cut.

Lessons learned: 1. ESMA set max forex leverage at 1:30 since 2018 — direct reaction to Frankenshock 2. Negative balance protection became mandatory on European retail accounts — avoid retail trader owing €50K to broker in gap 3. Currency pegs are never eternal — if central bank says "defending this level forever", historically wrong 90 % of time

Since 2015, Swiss franc floats freely, with discretionary SNB interventions (~CHF 50-100B/year).

Forex pairs involving CHF: - USD/CHF ("Swissy"): most traded, 50-100 pip daily range - EUR/CHF: heavily followed in Europe, 30-50 pip daily range (low volatility) - GBP/CHF: exotic, 80-150 pip daily range - CHF/JPY: Asian cross, large moves during global stress

Why is CHF a safe-haven? 1. Institutional stability: Switzerland has had no major banking crisis since 1929 (except UBS-Credit Suisse in 2023, quickly managed) 2. Trade surplus: Switzerland exports more than imports → structural CHF demand 3. Stable political system: direct democracy, no extremist government possible 4. Banking vaults: Swiss hold ~$2 trillion foreign assets, making CHF a global "reserve"

What strengthens CHF: geopolitical crises (war, populist election in Europe), global stock crash (-5 % S&P 500 = +1 to +2 % CHF), Fed/ECB rate cuts.

What weakens CHF: SNB interventions (direct selling), global risk-on, foreign rate hikes.

Practical strategy: trade negative correlation between CHF and S&P 500. When US stocks drop 3 % in one day, USD/CHF often falls 50-100 pips in following hours. A "natural hedge" for long-only equity portfolios.