Function of assets
The assets of the Swiss National Bank (SNB) fulfil important monetary policy functions. They consist largely of foreign currency assets, gold and, to a lesser extent, financial assets in Swiss francs. Their size and composition are determined by the established monetary order and the requirements of monetary policy. Under art. 5 para. 2 of the National Bank Act (NBA), the SNB is responsible for managing the currency reserves, part of which must be held in the form of gold (art. 99 para. 3 Federal Constitution). The currency reserves also include international payment instruments and the reserve position in the International Monetary Fund (IMF). The SNB requires currency reserves to ensure that it has room for manoeuvre in its monetary policy at all times. These reserves serve to build confidence, and to prevent and overcome potential crises. The level of the currency reserves is largely dictated by the implementation of monetary policy.
Breakdown of assets
At the end of 2014, the SNB’s assets amounted to CHF 561 billion, which was CHF 71 billion higher than one year earlier. The value of the currency reserves increased by CHF 64 billion to CHF 541 billion year-on-year. On the one hand, the increase was the result of valuation gains and income on currency reserves. On the other hand, foreign currency purchases made in the fourth quarter to enforce the minimum exchange rate contributed to this rise. Foreign exchange reserves rose by CHF 60 billion in the space of a year. The value of gold holdings climbed by CHF 4 billion. Swiss franc assets consisted of bonds to the amount of CHF 4 billion.
Debtor categories and instruments
At the end of 2014, the bond portfolios in the foreign currency investments contained government and quasi-government bonds as well as bonds issued by supranational organisations, local authorities, financial institutions (mainly covered bonds and comparable securities) and other companies. The equity portfolios in the foreign currency investments were comprised of shares from mid-cap and large-cap companies (excluding banks) in advanced economies and, to a lesser extent, shares of small-cap companies. The SNB does not engage in equity selection; it only invests passively. Thus, equities are managed according to a set of rules based on a strategic benchmark comprising a combination of equity indices in various markets and currencies.