Swiss National Bank (SNB) Asset structure

Asset structure

Function of assets

The assets of the Swiss National Bank (SNB) fulfil important monetary policy functions. They consist mainly of gold and foreign currency assets and, to a lesser extent, of financial assets in Swiss francs. The composition of assets is 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 SNB’s currency reserves are held primarily in the form of foreign currency investments and gold. The currency reserves also include international payment instruments and the reserve position in the International Monetary Fund (IMF). The National Bank requires currency reserves to ensure that it has room for manoeuvre in its monetary policy at all times. These reserves also serve to build confidence, and to prevent and overcome potential crises.

Breakdown of assets

At the end of 2010, the SNB’s balance sheet total was just under CHF 270 billion, or CHF 63 billion higher than one year earlier (CHF 207 billion). The increase is due to the growth in currency reserves, which rose from CHF 112 billion to CHF 252 billion in the space of a year. This was mainly attributable to foreign exchange purchases. In addition, there were valuation gains on gold in the order of CHF 6 billion. Holdings of Swiss franc-denominated assets, by contrast, decreased. Claims from repo transactions, which at end- 2009 had stood at CHF 36 billion, declined to zero, while Swiss franc bond holdings fell from CHF 7 billion to CHF 4 billion. Finally, the loan to the stabilisation fund also decreased. At the end of 2010, it amounted to CHF 12 billion, as compared to CHF 21 billion one year previously. The loan is denominated in various currencies, with interest being paid at 250 basis points above the one-month Libor for the currency concerned.

Debtor categories and instruments

At the end of 2010, the bond portfolios in the foreign exchange reserves and the Swiss franc bond portfolio contained government and quasi-government bonds as well as bonds issued by supranational organisations, local authorities, financial institutions (mainly covered bonds) and other companies. In the case of foreign exchange reserves, a limited number of secured and unsecured short-term placements were also made at banks. The equity portfolios were managed on a purely passive basis, with broad market indices in euros, US dollars, yen, pounds sterling and Canadian dollars being replicated. A small portion of gold holdings was used in the form of secured gold lending transactions at year-end.