Function of assets
The assets of the Swiss National Bank (SNB) fulfil important monetary policy functions. They consist 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 National Bank’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), but not the loan to the stabilisation fund. The National Bank 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. At present, the level of the currency reserves is a direct result of the implementation of monetary policy, in other words the enforcement of the minimum exchange rate.
Breakdown of assets
At the end of 2012, the SNB’s balance sheet total was CHF 499 billion, which was CHF 153 billion higher than a year earlier (2011: CHF 346 billion). This is mainly due to the growth in the currency reserves, which rose from CHF 171 billion to CHF 485 billion in the space of a year. The bulk of this growth resulted from foreign currency purchases, although valuation gains on the currency reserves also contributed. By contrast, at the end of 2012, the SNB no longer held any foreign exchange from swaps. Holdings of Swiss franc assets declined, because at the end of 2012 there were no outstanding claims from repo transactions in Swiss francs. The loan to the stabilisation fund decreased further, as a result of repayments, coupons and asset sales. At the end of 2012, it was down to just over CHF 4 billion, compared to CHF 8 billion a year previously. The loan is denominated in various currencies, with interest being paid at the one-month Libor for the respective currency plus 2.5 percentage points.
Debtor categories and instruments
At the end of 2012, the bond portfolios in the foreign currency investments and the Swiss franc bond portfolio contained government and quasigovernment bonds as well as bonds issued by supranational organisations, local authorities, financial institutions (mainly covered bonds) and other corporations. A portion of the foreign currency investments was placed on accounts at other central banks and with the Bank for International Settlements (BIS). The equity portfolios are made up of shares from medium-sized and large corporations in advanced economies. The SNB takes care to ensure that its equity management, too, has no impact on the markets. Furthermore, it does not regard itself as a strategic investor. Thus, equities are managed passively and according to a set of rules, and on the basis of a strategic benchmark comprising a combination of equity indices in various currencies.