The SNB's investment policy - some topical issues
Fritz Zurbrügg, Member of the Governing Board
Money Market Event, Geneva, 20.11.2014
In the search for diversification, Asia-Pacific markets in particular have become increasingly important for the Swiss National Bank's (SNB) investment policy in recent years. The SNB took the decision to open a Singapore branch office in mid-2013 with this in mind. The growing importance of Asia-Pacific markets is also reflected in the SNB's foreign exchange reserves, where exposure to Japan, Australia, Singapore and Korea has been increased in recent years. In addition to this, the SNB signed a renminbi investment quota agreement with China's central bank in July 2014. The SNB may invest in the onshore Chinese interbank bond market within the scope of this investment quota, which totals CNY 15 billion (in excess of CHF 2 billion). While this quota represents a small proportion of the SNB's foreign exchange reserves, it allows it to gather some experience of this market.
Another important component of the currency reserves is gold. On 30 November, the Swiss electorate will be voting on the popular initiative 'Save our Swiss gold' (also known as the 'gold initiative'), which the SNB considers to be unnecessary and harmful. The SNB's legal mandate is to ensure price stability. In a system of flexible exchange rates, gold is no longer required for it to perform this function. The gold initiative is harmful because prescriptions on the share of gold in the balance sheet, coupled with a sales ban, would make it considerably more difficult for the SNB to fulfil its mandate in future. Within the scope of its mandate, the SNB needs a certain amount of latitude in order to continue fulfilling its monetary and investment policy objectives, especially given that the Swiss monetary policy landscape is set to remain challenging for the foreseeable future.