SNB Gold Sales – Lessons and Experiences

Philipp Hildebrand, Member of the Governing Board

Institute for International Economics, Washington D. C., 05.05.2005

The Swiss National Bank completed its gold selling program of 1300 tonnes on March 30, 2005. Before these sales, Switzerland’s relative position with respect to gold holdings was extreme among the G10 countries. Furthermore, the SNB had excess capital reserves that were no longer necessary for monetary purposes. However, it was only in May 2000 that the last relics of the gold-standard were removed from the Swiss legal framework and the SNB was in a position to start selling gold. The SNB adopted a transparent selling strategy that, within the constraints of the so-called Washington Agreement, tried to maximize the proceeds of the gold sales in Swiss francs. From the Swiss experience, two lessons can be drawn. First, the decision to sell official gold holdings should be made separately from any consideration on how to use the proceeds. Second, official sales are best conducted in the context of a clear and transparent framework.