Accountability report
Under the National Bank Act, the SNB is obliged to report to the Federal Assembly each year on the fulfilment of its statutory tasks. The accountability report describes the economic and monetary developments during the period under review and gives a detailed presentation of how the SNB fulfilled its tasks. The accountability report is part of the SNB's Annual Report.
Additional Tier 1 (AT1) capital

Additional Tier 1 (AT1) capital instruments contain features that should, like Common Equity Tier 1 (CET1) capital, enable a bank to absorb losses on a going-concern basis. To qualify as AT1 capital, these instruments must therefore meet certain requirements (cf. Capital Adequacy Ordinance, art. 27). These requirements include the right to cancel dividends or interest payments and to defer repayment of the nominal amount indefinitely. Moreover, if these instruments are similar to bonds, they must contain a contractual mechanism - either a write-down mechanism or a conversion to common shares - for the purpose of creating CET1 capital in case a bank's risk-weighted CET1 capital ratio falls below a quantitative threshold (7% under the Swiss TBTF regulations, 5.125% according to the Basel minimum standard) and in case further trigger events relating to government support and non-viability occur.

Affordability risk

Affordability risk refers to the probability that borrowers cannot afford to service their loan obligations (e.g. interest, amortisation) with their financial resources. It increases with a rise in interest rates or a decline in financial resources. One measure of affordability risk is the loan-to-income (LTI) ratio.

Annual Report
The SNB's Annual Report comprises the accountability report and the financial report.
Article IV consultation

The International Monetary Fund (IMF) monitors a country's economic development on a regular basis (usually once a year) and assesses the impact of its policies on the exchange rate and the balance of payments. The assessment is carried out according to the provisions of article IV of the IMF Charter. IMF staff compiles a report which is discussed in the Executive Board. The Board's recommendations are passed on to the country in question. Publication of a summary of the discussion and the report is voluntary, but recommended to member states. The report on Switzerland's article IV consultation is published by the State Secretariat for International Financial Matters and the IMF.


Bail-in instruments
Bail-in instruments are debt securities issued by systemically important banks which are written off and converted to equity in the event of impending insolvency. They are used to recapitalise the bank concerned. In this way, creditors also bear a share of the losses. In Switzerland, bail-in instruments are only written off and converted to equity in the event of resolution and following an order from FINMA.
Balance of payments
The balance of payments comprises the cross-border exchange of goods and services, primary income (labour income and investment income), secondary income (current transfers), as well as capital transfers and financial flows to and from other countries during a certain period. The development and the structure of the balance of payments provide information on a country's foreign trade and investment relations. The methodological basis of balance of payments statistics is the Balance of Payments Manual of the International Monetary Fund (IMF). The Swiss balance of payments, which is compiled by the SNB, is divided into three sections, namely the current account, the capital account and the financial account.
Bank categories

For statistical purposes, the SNB divides banks in Switzerland into bank categories according to characteristics such as nature of business, institutional structure, geographic scope of activities and size of total assets. However, no hard-and-fast criteria are used for the categorisation. The SNB divides the Swiss banking system into the following categories: big banks, cantonal banks, regional and savings banks, Raiffeisen banks, other banks (including stock exchange banks, other banking institutions and foreign-controlled banks), branches of foreign banks and private bankers. Foreign-controlled banks and branches of foreign banks are sometimes classed together as foreign banks.

For financial stability purposes, the SNB divides banks in Switzerland into three broad categories reflecting their business models: globally active banks, domestically focused banks, and ‘Other banks’. Until May 2023, the category of globally active banks comprised Credit Suisse and UBS; since then it has consisted of the combined bank resulting from the acquisition of Credit Suisse by UBS. The category of domestically focused banks includes banks with a share of domestic loans to total assets exceeding 50% or with a prominent role in the domestic deposit market. These are primarily regional, cantonal and Raiffeisen banks. The category of ‘Other banks’ includes more specialised domestic banks, most of them with a focus on wealth management, as well as branches and subsidiaries of foreign banks.

Bank Council

The Bank Council oversees and controls the conduct of business by the SNB, in particular as regards compliance with legislation, regulations and directives, but not regarding monetary policy decisions and monetary policy actions of the Governing Board. Of the eleven Bank Council members, five are elected by the General Meeting of SNB shareholders and six by the Federal Council, which also appoints the President and Vice President of the Bank Council. The Bank Council has a Compensation Committee, a Nomination Committee, an Audit Committee and a Risk Committee.

Bank for International Settlements (BIS)
The Bank for International Settlements (BIS) was founded in 1930 and has its headquarters in Basel. It promotes international monetary and financial cooperation. The central bank governors of the BIS members meet regularly for an exchange of information. The BIS maintains the secretariat for various committees and groups of experts, e.g. for the Basel Committee on Banking Supervision and the Financial Stability Board (FSB). As a bank for central banks, it manages the currency reserves of numerous countries and international financial institutions. Moreover, it grants bilateral monetary assistance loans and acts as counterparty for central banks in their financial transactions. The SNB has occupied one of the seats on the BIS Board of Directors since the BIS's foundation.
Banker to the Confederation
In accordance with the National Bank Act, the SNB may provide banking services to the Swiss Confederation. It maintains sight deposit accounts in Swiss francs and foreign currencies for the Confederation, and carries out payments for it. The SNB issues money market debt register claims and Confederation bonds on behalf and for the account of the Confederation, and acts as the paying agent. These services are provided for an adequate consideration. However, they are free of charge if they facilitate the implementation of monetary policy. The SNB may not grant the Confederation loans or overdraft facilities, nor is it permitted to buy new issues of government debt securities.
Banking Act
The aim of the Banking Act (Federal Act on Banks and Savings Banks) is to protect creditors and to strengthen the Swiss financial centre. It sets out rules on authorisation for the commencement of banking activities, on the banking activities themselves and on the presentation of accounts. It also stipulates that the audits required under banking law be conducted by private auditors and defines FINMA as being responsible for supervising the banks.
Banking book

The Basel Committee on Banking Supervision (BCBS) states that the banking book consists of all instruments that are not required to be held in the trading book (RBC25). For example, the banking book consists of assets on the balance sheet that are expected to be held to maturity (e.g. retail mortgages or corporate credit) as well as liabilities such as deposits from retail and corporate customers.

Banknote circulation
The sum of all banknotes issued by the SNB is referred to as banknote circulation. Notes in circulation, together with the sight deposits of domestic commercial banks held at the SNB, make up the monetary base. Banknotes in circulation represent a liability of the central bank vis-à-vis the public, and are thus shown on the liabilities side of the central bank's balance sheet.
Banknote denomination
Banknote monopoly
Banknote series
A banknote series consists of different denominations, which are developed, designed and produced at the same time. There have been nine banknote series in Switzerland. The notes of the first series were put into circulation in 1907 and were considered interim banknotes. Not all of the eight banknote series were actually put into circulation. The fourth and seventh series were held as reserve series. The SNB put the six denominations of the ninth banknote series into circulation between 2016 and 2019.
Base money
Basel Capital Adequacy Framework
Basel Committee on Banking Supervision (BCBS)

The Basel Committee on Banking Supervision was established in 1974 by the Bank for International Settlements (BIS) in response to the collapse of Bank Herstatt in Germany, which was brought about by currency speculation. The Committee is made up of representatives of central banks and banking supervisory authorities from 27 countries. Switzerland is represented by FINMA and the SNB. The Basel Committee's main objectives are to promote the exchange of information between national supervisory authorities, to enhance supervisory techniques and to issue recommendations for regulatory minimum standards. The decisions and recommendations of the Basel Committee attract a great deal of attention worldwide. They are not binding, however, as the Committee does not exercise a supranational banking supervisory function. Particularly significant is the Basel Capital Adequacy Framework, also known as Basel I, Basel II and Basel III.

Basel I
Issued by the Basel Committee for Banking Supervision, the Basel Capital Adequacy Framework is aimed at increasing the stability of the international financial system and promoting a level playing field in competition among banks. The original Basel Capital Accord (Basel I), issued in 1988, focused on the provision of minimum cover for credit risk. The Amendment to the Capital Accord to incorporate market risks was issued in 1996.
Basel II
The first revision (Basel II) of the Basel Capital Accord (Basel I) was issued in 2004, and was aimed, first, at extending the capital requirements to cover operational risks and making them generally more sensitive to risk. Second, the minimum capital requirements were supplemented by two further pillars: the supervisory review process and the disclosure obligations for the purpose of strengthening market discipline.
Basel III

The second revision (Basel III) was agreed by the Basel Committee on Banking Supervision in the wake of the global financial crisis of 2008. It was implemented in two stages. The first involved stricter risk-based capital requirements with a countercyclical effect, as well as limits on leverage (leverage ratio). It also specified a global minimum liquidity standard. In Switzerland, these measures were phased in by end-2018. The second stage was finalised by the Basel Committee in 2017, and was aimed at restoring credibility in the calculation of risk-weighted assets by constraining the use of internally modelled approaches and enhancing the risk sensitivity of the standardised approaches. The new measures will come into force on 1 January 2025.

Baseline scenario
The SNB's baseline scenario comprises forecasts for what it considers to be the most likely global economic development over the coming three years. It serves as an important basis for the economic and inflation forecasts for Switzerland.
Basket of goods
The basket of goods represents an average household's expenditure on goods and services. It is determined on the basis of a household survey and is used to calculate the Swiss consumer price index (CPI).
Big banks
In terms of total assets, earnings and staff numbers, Switzerland's big banks, UBS and Credit Suisse, together constitute the largest bank category (according to the SNB's definition) in Switzerland. They are universal banks offering a full range of banking services both in Switzerland and - unlike most of the other banking groups - abroad.
BIS Innovation Hub Swiss Centre
In 2019, the Bank for International Settlements and the SNB established the BIS Innovation Hub Swiss Centre, which is conducting research on two projects. Project Helvetia involves collaboration between the SNB, the BIS and SIX Group Ltd. The focus is on the integration of central bank digital currency (CBDC) for financial institutions into a financial market infrastructure for the settlement of digital (tokenised) assets based on distributed ledger technology (DLT). Two approaches were investigated and tested in proof-of-concept studies. The report published in December 2020 indicated that both approaches are technically feasible and can be implemented under civil law within Switzerland's legal framework. The second phase of the project will analyse the advantages and disadvantages of both approaches in more detail. Project Rio is developing a prototype data architecture that will enable the rapid market movements and large volumes of data emanating from various trading centres to be processed by the central banks in real time. This will provide them with an instrument for monitoring and analysing trading conditions in fast-paced markets.
Board of Governors
The highest body of the International Monetary Fund (IMF) is the Board of Governors, in which all member countries are represented. The Board of Governors delegates a large part of its executive authority to the Executive Board. Switzerland's interests are represented on the Board of Governors by the Chairman of the SNB Governing Board.
Book money
Book money is a balance held in a bank or post office account. It is also known as sight balances or money in account.
Bretton Woods institutions
In summer 1944, representatives from 45 nations met in Bretton Woods, a small town in the US state of New Hampshire, for the United Nations Monetary and Financial Conference. The Bretton Woods conference led to the foundation of the International Monetary Fund (IMF) and the World Bank in 1945. The Bretton Woods institutions are specialised agencies of the UN. Switzerland has been a member of the two institutions since 1992.
Business cycle
A business cycle lasts from the beginning of an economic upturn, throughout the economic boom and all the way through the downturn to its end, i.e. recession. Apart from gross domestic product (GDP), the business cycle is also reflected in a number of other economic indicators such as unemployment and consumer confidence indices.
Business risk

At banks, business risk refers to the risk of reduced revenues, in particular due to a drop in business volume or client activity.


Cantonal banks
The defining characteristic of cantonal banks is that the canton holds more than a third of its capital and exercises control over more than a third of its shareholder voting rights. Cantonal banks are today largely universal banks, with a strong emphasis on savings and mortgage business. For most of the cantonal banks, the canton takes either full or partial responsibility for liabilities.

Capital refers to the difference between the value of a company’s assets and liabilities. Capital serves as a buffer against potential losses, ensuring banks’ solvency and ability to withstand adverse scenarios and severe shocks. For banks, the eligible regulatory capital consists of three categories: Common Equity Tier 1 (CET1), Additional Tier 1, and Tier 2.

Capital Adequacy Ordinance (CAO)

The Capital Adequacy Ordinance (SR 952.03) applies to banks and account-holding securities firms and regulates the capital required to adequately limit their risks and thereby protect creditors and the stability of the financial system. The specific capital requirements depend in particular on the type, risk profile and size of the financial institution.

Capital market
The capital market supplements the money market, and is a market for raising and investing medium to long-term funds. Medium-term loans are generally those with a term of one to four years, with anything beyond that considered long term. In this context, a distinction must be made between the stock market for equity capital, and the bond market, where debt certificates (bonds), i.e. borrowed capital, are issued and traded.
Capital ratio

Capital ratios set a bank's capital in relation to its risk-weighted assets or total exposure.

Capital transfers
Capital transfers are part of the balance of payments. They comprise trade in intangible non-financial assets (e.g. patents) and the provision of capital without economic consideration. Capital transfers in the Swiss balance of payments include, for example, debt relief for developing countries and capital payments in connection with development aid.
Cash is understood to mean banknotes and coins that are deemed legal tender.
Cash deposit facility
A cash deposit facility is a stock of banknotes and coins that the SNB sets up with a third party for use by cash processing institutions. However, the SNB retains ownership of the banknotes and coins stored in the external deposit facility.
Cash processing institution
Cash processing institutions are private companies that handle the sorting of banknotes and coins on behalf of third parties (banks, Swiss Post, retailers, small businesses, etc.). These companies subsequently hand over excess or damaged banknotes and coins to the SNB. They also participate in the distribution of banknotes and coins.
Central bank
A central bank is the monetary authority of a currency area (country or monetary union). As a rule, it has the exclusive right to issue banknotes (note-issuing privilege) and conducts the monetary policy of the respective currency area. Switzerland's central bank is the Swiss National Bank (SNB).
Central bank digital currencies (CBDC)
CBDC denotes money that a central bank could create in digital form and make available to a restricted group of users or the general public. General-purpose CBDC is seen as a supplement to existing forms of central bank money (in Switzerland, these are banknotes and sight deposits of domestic banks held at the SNB). CBDC would be legal tender, unlike digital currencies issued by private individuals (cryptocurrencies). The SNB is working on Project Helvetia as part of its involvement in the BIS Innovation Hub Swiss Centre. This project is focused on the integration of CBDC for financial institutions into a financial market infrastructure for the settlement of digital (tokenised) assets based on distributed ledger technology (DLT).The SNB is also involved in a central bank working group that is evaluating the potential uses of CBDC and published an initial report in October 2020.
Central counterparty
A central counterparty is an institution which interposes itself between buyers and sellers on a market, acting as seller to every buyer and as buyer to every seller. The central counterparty is responsible for the management and performance of the contracts. Most notably, it assumes the counterparty risk, i.e. the risk that a contracting party cannot meet the obligations arising from the contract. Should one of the parties fail to meet its obligations, the central counterparty must have sufficient financial resources and liquidity to cover potential losses and meet its payment and delivery obligation on time.
Clearing is the process of transmitting, reconciling, confirming and, in some cases, netting reciprocal obligations as well as calculating the final positions for settlement of a payment or securities transaction.
Common Equity Tier 1 (CET1) capital

Common Equity Tier 1 (CET1) capital represents the highest quality of capital a bank holds. It is a measure of a bank's core equity and serves as a primary indicator of a bank's financial strength and ability to absorb losses. CET1 consists of the sum of the following elements: common shares (or, for banks not organised as joint-stock companies, company capital of the highest quality), disclosed reserves, reserves for general banking risks, and retained earnings.

Together with Azerbaijan, Kazakhstan, the Kyrgyz Republic, Poland, Serbia, Tajikistan, Turkmenistan and Uzbekistan, Switzerland forms one voting group (constituency), and is a member of the Executive Board of the International Monetary Fund (IMF).
Consumer price index (CPI)

The Swiss consumer price index (CPI), which is compiled by the Federal Statistical Office (FSO), measures the average development of prices for goods and services in demand by private households in Switzerland. The CPI is calculated every month based on a basket whose contents represent private household consumption. The CPI is used to measure the inflation rate in Switzerland. The SNB uses the CPI as a basis for its definition of price stability.

Contingent capital instruments (CoCos)

Contingent capital instruments (CoCos) are hybrid instruments that are automatically converted into equity or are written off when a bank’s risk-weighted CET1 capital ratio falls below a quantitative threshold. The Swiss TBTF regulations define two types of CoCos, depending on the threshold level: For high-trigger CoCos (HT CoCos), this level is set at 7%, and for low-trigger CoCos (LT CoCos) at 5.125% or 5%. The contractual terms must include further trigger events for this mechanism relating to government support and non-viability. CoCos with trigger levels set at 7% and 5.125% count as AT1 capital, those with a trigger level at 5% as Tier 2 capital.

Continuous Linked Settlement (CLS)
Continuous Linked Settlement (CLS) is an international foreign exchange settlement system.
Contribution obligation (deposit insurance)

The contribution obligation corresponds to the obligation of banks to contribute to the Swiss deposit insurance in the event of a crisis. The maximum contribution is 1.6% of insured deposits.

Core inflation
Core inflation is a measure of inflation that excludes goods and services with particularly volatile prices (e.g. energy and food). Core inflation thus captures the underlying price trend. The SNB calculates core inflation using a trimmed mean, whereby each month the 15% of items in the CPI basket with the largest and the 15% with the smallest price changes compared to the same month one year earlier are excluded.
Countercyclical capital buffer (CCyB)

The countercyclical capital buffer is a (preventative) macroprudential measure for financial stability within the Basel III framework, which has been available in Switzerland since 2012. If the capital buffer is activated, banks are required to carry out a temporary and gradual increase in their capital in the event of vulnerabilities on the mortgage and residential real estate markets. The aim is to protect the banking industry from the consequences of excessive lending growth by increasing banks' loss-absorbing capacity. Moreover, a capitalisation means that the costs of lending rise, and this can counter the build-up of vulnerabilities. The capital buffer may be activated for the entire credit market or just for one sector, for instance the mortgage market, and is set at a maximum level of 2.5% of the entire domestic risk-weighted assets of a bank. If the SNB decides that an activation, adjustment or deactivation of the buffer is required, it makes a proposal to the Federal Council after consultation with FINMA. In February 2013, at the proposal of the SNB, the Federal Council decided to activate the sectoral countercyclical capital buffer on mortgage lending to finance residential property in Switzerland for the first time. In January 2014, the countercyclical capital buffer was increased from 1% to 2% of the corresponding risk-weighted exposures. At the end of March 2020, the Federal Council approved the SNB's proposal that the capital buffer be deactivated to give banks maximum latitude for lending in connection with the coronavirus crisis. In January 2022, the Federal Council reactivated the sectoral CCyB at the proposal of the SNB, and set it at 2.5% of risk-weighted exposures secured by residential property mortgages in Switzerland. It did so because the reasons that had led to it being deactivated no longer existed and because the vulnerabilities on the mortgage and residential real estate markets had also increased since the deactivation.

Credit default swap (CDS)

A credit default swap (CDS) is a credit derivative used to transfer credit risk. It offers insurance against the risk of default of a legal entity. CDS are especially important to hedge the risk of default on a bond. The protection buyer makes periodic payments to the protection seller. In return, when a credit event occurs the buyer is compensated by the seller with the difference between the par value of the bond or loan and its market value after default. The contract ends at maturity or when the reference entity experiences a credit event.

Credit risk

Credit risk is the risk of loss due to a client or counterparty failing to make contractually agreed payments (e.g. interest, amortisation).


A cryptocurrency is a digital representation of value which can be traded on the internet. It performs the role of money, but is only accepted in certain instances as a means of payment. Such currency is issued and controlled by an unregulated institution or a computer network. One example is Bitcoin. Stablecoins are a special type of cryptocurrency.

Currency in circulation
Currency in circulation is made up of banknote circulation and coin circulation minus the cash holdings of banks.
Currency reserves
The SNB's currency reserves comprise its gold holdings, the foreign currency investments, the reserve position in the International Monetary Fund (IMF) and the international payment instruments.
Currency Treaty

The Principality of Liechtenstein has, by statute, introduced the Swiss franc as its legal tender. The Currency Treaty between the Swiss Confederation and Liechtenstein governs the collaboration between the two countries with regard to the joint currency area. The SNB acts as the central bank for the Principality.

Current account
The current account is part of the balance of payments. It is made up of goods trade and services transactions with other countries, primary income (cross-border labour income and investment income) and secondary income (current transfers). Secondary income comprises transfer payments that are free of charge and, in contrast to capital transfers, do not constitute the provision of capital. The current account is also referred to as the 'real' part of the balance of payments (as opposed to the financial part in the financial account).
Cyber risk

Failures of - and disruptions to - IT systems resulting from cyberincidents can severely jeopardise the availability, integrity and confidentiality of data as well as critical services and functions within the financial system. The highly interconnected nature of the financial system and the various cross-institutional processes mean that sector-wide measures are necessary alongside the precautions taken by the individual financial institutions. As part of its mandate, the SNB also contributes to cybersecurity in the financial sector. For instance, it is participating in a project under the direction of the National Cyber Security Centre that promotes institutionalised cooperation between the private sector and the authorities in strategic and operational cybersecurity matters with a view to further strengthening the financial centre's defences.


Deflation is the opposite of inflation and denotes a continued decline in the general price level over a longer period. The deflation rate measures the percentage decrease of the price index. Inversely to inflation, deflation leads to a rise in the purchasing power of money. The aim of the SNB's monetary policy is to avoid both inflation and deflation and thus ensure price stability.
Delegates for regional economic relations
Delivery versus payment
Delivery versus payment refers to the mechanism whereby reciprocal obligations from securities transactions are settled. It ensures that the financial instruments are irrevocably transferred if - and only if - payment takes place, thereby eliminating settlement risk.
A banknote series consists of different denominations, each with a different nominal value. The ninth series has six denominations: the 10, 20, 50, 100, 200 and 1000 franc notes.
The Swiss National Bank is divided into three departments. Each department has a specific area of business. Departments I and III are for the most part located in Zurich, while Department II is mainly located in Berne. The SNB also maintains a branch office in Singapore.
Deposit insurance

Deposit insurance is one element of depositor protection in Switzerland. In the event of a bank’s bankruptcy, the deposit insurance scheme protects client deposits against loss up to the amount of CHF 100,000.

Derivatives are financial instruments whose price is derived from that of an underlying asset. Underlying assets can be commodities, securities such as shares or bonds, as well as exchange rates, interest rates and indices. Derivatives can also be based on the probability of the occurrence of certain events (e.g. default). Call and put options, forwards, futures and swaps are all examples of derivatives.
Digital central bank money
Digital token

A digital token is the digital representation of an underlying value, much as a banknote is the physical representation of a value. Tokens can be transferred from one party to another. In technical terms, digital tokens are data, such as that stored in a distributed ledger, which can be accessed with a private digital key.

Distributed ledger technology, DLT
A distributed ledger is a decentralised and synchronised database that allows participants to read, write and save information. Distributed ledger technology (in particular blockchain) makes it possible to unequivocally define ownership structures within a computer network, without the need for a central third party.
Distribution reserve
The distribution reserve serves as a buffer to help smooth the SNB's annual profit distribution to the Confederation and the cantons and forms part of the SNB's equity. While the SNB's annual profit is subject to considerable fluctuation, the National Bank Act and the profit distribution agreement between the Federal Department of Finance and the SNB provide for a smoothing of distributions over several years. The difference between distributable annual profit and actual distribution of profits is balanced out via the distribution reserve. However, the distribution reserve provides no guarantee that a distribution is possible in all cases.
Domestically focused systemically important bank (DF-SIB)

Of the four systemically important banks in Switzerland, PostFinance, Raiffeisen Group and Zürcher Kantonalbank are domestically focused banks.


Electronic money (e-money)
Electronic money, or e-money, describes electronically stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions, and which is accepted by a natural or legal person other than the electronic money issuer. This includes prepaid cards with multiple uses. E-money is an additional form of money alongside base money and commercial banks' book money.
Emergency liquidity assistance
Based on the National Bank Act, the SNB also functions as lender of last resort. Under the emergency liquidity assistance arrangements, it can provide domestic banks with liquidity if they are no longer able to refinance their operations on the market. Emergency liquidity assistance is provided only if the bank or group of banks seeking credit is of importance for the stability of the financial system and is solvent, and if the liquidity assistance is covered by sufficient collateral at all times. The SNB determines what collateral is sufficient. Apart from liquid bank assets, less liquid bank assets with high credit ratings may also serve as collateral, for instance, mortgage claims.
Emergency plans
Emergency plans, together with the capital requirements (going-concern and gone-concern requirements), are aimed at alleviating the 'too big to fail' issue of systemically important banks. They set out how to ensure that systemically important functions can be maintained in the event of a crisis, and include measures to reduce organisational and financial dependencies.
Enlarged Governing Board
Exchange rate
The exchange rate designates the rate at which two currencies are exchanged. It is expressed as the price of one currency in units of another currency. Expressing the price of a foreign currency unit in domestic currency terms is called direct quotation (e.g. CHF 0.91 per USD), expressing a domestic currency unit in foreign currency terms is known as indirect quotation (e.g. USD 1.12 per CHF). The external value corresponds to the exchange rate expressed in the indirect quotation. Direct quotation is what is normally used in Switzerland. An exchange rate adjusted for price developments in the countries concerned is known as the real exchange rate. If the exchange rate is measured against a basket of foreign currencies, this is called an effective exchange rate.
Exchange rate index
An exchange rate index combines the external value of the domestic currency against the currencies of trading partners to a single measure. The currencies are weighted in accordance with the significance of the trading partner for the domestic economy (weighted effective exchange rate). The nominal exchange rate index measures a currency's nominal external value. If the domestic currency appreciates on average, the index rises. The real exchange rate index measures the real external value of the domestic currency. A rise in the index value indicates real-term appreciation of the domestic currency. This means real purchasing power increases on average.
Exclusion criteria for SNB investments
The SNB holds part of its foreign exchange reserves in the form of shares and corporate bonds. When managing such investments, the SNB also takes non-financial aspects into consideration. Owing to its special role vis-à-vis the banking sector, the SNB refrains from investing in shares of systemically important banks worldwide. The SNB also respects Switzerland's fundamental standards and values in its investment policy by not acquiring shares or bonds of companies that seriously violate fundamental human rights, systematically cause severe environmental damage or are involved in the production of internationally condemned weapons. Companies are excluded under the criterion of systematically causing severe environmental damage if they, for example, systematically pollute waterways or the countryside, or seriously damage biodiversity through their production operations. Since December 2020 the SNB has also been taking climate-related issues into account by excluding companies with a business model primarily based on the mining of coal for energy production. Condemned weapons include biological and chemical weapons, cluster munitions and anti-personnel mines. Moreover, the SNB excludes companies involved in the production of nuclear weapons for countries that are not among the five legitimate nuclear-weapon states as defined by the UN.
Executive Board
The Executive Board is the highest executive body of the International Monetary Fund (IMF). It has 24 members. Switzerland is a member of a constituency that it represents on the Executive Board alternately with Poland on a two-year rotating basis. Switzerland's executive director is appointed by the Federal Department of Finance and the SNB on an alternating basis.
Exemption threshold
Between January 2015 and September 2022, the SNB charged negative interest on sight deposits. The exemption threshold was the portion of a bank's sight deposits at the SNB on which the SNB did not charge negative interest. The exemption threshold was at least CHF 10 million per sight deposit account holder. For a domestic bank, the exemption threshold was calculated as the three-year average of the minimum reserve requirement multiplied by the threshold factor minus the bank's cash holdings.
External value of money


Federal Act on Banks and Savings Banks
Federal Act on Currency and Payment Instruments
The Federal Act on Currency and Payment Instruments defines the Swiss franc as Switzerland's currency, determines legal tender and governs banknote and coin matters.
Federal Act on International Monetary Assistance
Federal Act on the Swiss National Bank
Federal Mint
Financial account
The financial account is part of the balance of payments. The financial account shows the creation and settlement of cross-border financial claims and liabilities. Depending on the investment motive, a distinction is made between direct investments, portfolio investments, derivative financial instruments, reserve assets and other investments.
Financial market infrastructure
The financial market infrastructure comprises all systems used to clear and settle financial market transactions. In Switzerland, the operators of these systems are all part of SIX Group Ltd. The SNB monitors the systemically important financial market infrastructure in Switzerland and can impose minimum requirements on its operators.
Financial Market Infrastructure Act (FMIA)

The Financial Market Infrastructure Act (FMIA) came into force on 1 January 2016. It establishes a regulatory and supervisory framework for the financial market infrastructure in Switzerland. On the one hand, it comprises the supervisory requirements for the operation of financial market infrastructures (FMIs). On the other hand, it includes all the rules relating to securities and derivatives trading, which apply to all financial market participants.

Financial Market Supervisory Authority
Financial Market Supervisory Authority
Financial stability

A stable financial system is understood to be a system whose individual components - banks, financial markets and financial market infrastructures - fulfil their individual functions and are resilient to potential shocks. Financial stability is an important prerequisite for economic development and effective monetary policy implementation. Under the National Bank Act, the SNB has the task of contributing to the stability of the financial system.

Financial Stability Board (FSB)
The Financial Stability Board (FSB) brings together representatives of national authorities responsible for financial stability (central banks, regulatory authorities and finance ministries). In 2009, the G20 gave the FSB a mandate to promote financial stability and formulate appropriate regulatory and oversight measures. Since then, it has developed a number of reform proposals, including those aimed at alleviating the 'too big to fail' issue. The SNB has been involved in these efforts. The FSB has been an association under Swiss law since 2013.
Financial Stability Report
In its Financial Stability Report, which is published annually, the SNB presents its assessment of the stability of Switzerland's banking sector. For the SNB, the report is an important way to contribute to the stability of the financial system, and thereby fulfil its statutory mandate in this regard. The report highlights tensions or imbalances that might pose a threat to financial stability in the short or long term, and suggests appropriate action to deal with them.
Financial system stability
Fine-tuning operations
Fine-tuning operations refer to measures taken by a central bank to curb excessive volatility in short-term interest rates on the money market. This can be carried out using repo transactions, for example.
FINMA (Swiss Financial Market Supervisory Authority)

The Swiss Financial Market Supervisory Authority (FINMA) is responsible for the supervision of banks, insurance companies, stock exchanges, securities dealers, collective capital schemes, distributors and insurance intermediaries. As an independent authority, it acts to protect creditors, investors and insured persons, and to ensure the proper functioning of financial markets. In the area of financial stability, the SNB and FINMA work together. The division of individual tasks and the details of the collaboration are set out in a Memorandum of Understanding.

The term 'fintech' (financial technology) is used, first, to denote technological innovations such as distributed ledger technology (in particular blockchain). Second, it refers to financial products and services in which technological advances are applied to traditional financial services (e.g. crowdlending). Third, it pertains to providers of financial products and services who were not previously active within traditional areas of finance. Fintech developments are primarily driven by advances in IT. The new opportunities support the trend for improved availability of financial services (time and place), faster settlement of transactions and greater user-friendliness.
Fiscal policy
Fiscal policy comprises the measures taken by a government that aim to influence business cycle conditions through receipts and expenditure. Like monetary policy, fiscal policy is a branch of a country's economic policy.
Foreign banks
According to the SNB definitions of bank categories, foreign banks are made up of the foreign-controlled banks category and the branches of foreign banks category. Foreign-controlled banks are organised in accordance with Swiss law; a bank is deemed to be foreign-controlled if foreigners with a qualified participation in the bank directly or indirectly hold more than half of its voting shares, or if they exercise a controlling interest in any other manner. Branches of foreign banks are defined as branch offices that are legally dependent on foreign banks. Foreign banks constitute a mixed bank category with two features in common: most of their clients are situated abroad and they are engaged in international banking operations.
Foreign currency investments
Foreign currency investments is the term used to describe the SNB's investments in the form of foreign bonds, shares and deposits at other central banks. Foreign currency investments are the most important asset in the SNB's balance sheet and form part of the currency reserves that are managed under the SNB's investment policy.
Foreign exchange
Foreign exchange comprises financial claims denominated in foreign currency and payable abroad. Examples are foreign sight and time deposits and cheques denominated in foreign currency.
Foreign exchange market
The foreign exchange market is where currencies are traded. These are traded over the counter (OTC) and the market is made up of various segments, defined either by type of participant (e.g. interbank market) or type of platform (e.g. electronic or telephone).
Foreign exchange market intervention
Foreign exchange market intervention occurs when a central bank buys or sells its domestic currency for one or more foreign currencies with the goal of strengthening or weakening its own currency and thus influencing the exchange rate.
Foreign exchange reserves
Foreign exchange swap
A foreign exchange swap is a combination of a foreign currency spot transaction and a foreign currency forward transaction. In a liquidity swap, the SNB buys foreign currency from commercial banks against Swiss francs for a fixed term and sells it to them, also for a fixed term. At the end of the term, the reverse transaction is carried out at a previously agreed exchange rate. Swaps can be drawn up with very flexible terms and alternative conditions.
FX Global Code

The FX Global Code was published in 2017 and sets out principles of good practice in the foreign exchange market that were developed by central banks and market participants on the main foreign exchange trading centres. The SNB signed the Statement of Commitment to the FX Global Code in 2018.


The G7 is an international forum with a global focus. It comprises representatives from the governments of seven major economies, namely Canada, France, Germany, Italy, Japan, the UK and the US. The presidency changes every year, and the heads of state and government meet at the annual G7 summit. Topics that are addressed encompass the entire spectrum of global politics.
The G20 is an informal association of 20 important advanced economies and emerging economies. It addresses international economic and financial issues. The G20 issued the Financial Stability Board (FSB) the mandate for furthering financial stability. Switzerland is not a member of the G20.
The G30 is a private international body founded in 1978. It consists of 30 influential persons from around the world, including central bank governors, representatives of regulatory authorities, economic policymakers, financial sector representatives and prominent economists. The G30 aims to contribute towards improving the understanding of global financial and economic issues.
General Meeting of SNB Shareholders
The SNB is a special-statute joint-stock company and, as such, has a General Meeting of Shareholders. As stipulated in the National Bank Act, shareholder rights are limited. The SNB's annual General Meeting of Shareholders approves the SNB's business and financial report and determines the dividend. The General Meeting of Shareholders also appoints five of the eleven Bank Council members. SNB shares are listed on the Swiss stock exchange.
Global systemically important bank (G-SIB)

A global systemically important bank (G-SIB) is a bank whose failure would trigger a wider financial crisis and threaten the global economy. G-SIBs are identified based on an assessment methodology designed by the Basel Committee on Banking Supervision (BCBS) which takes into account factors such as a bank's size, complexity and systemic interconnectedness.

Going-concern/Gone-concern requirements
Going-concern and gone-concern requirements are capital requirements for systemically important banks issued in the context of the 'too big to fail' regulations. Going-concern requirements are aimed at ensuring that banks have sufficient capital to cover losses from their ongoing business activities and to allow them to continue operating. Gone-concern requirements are intended to ensure that an institution which is in financial distress can be either recovered or wound down in an orderly fashion ('resolution').
Governing Board
The Governing Board is the supreme management and executive body of the SNB. It consists of three people: the Chairman, the Vice Chairman and one additional member. The Governing Board is, among other things, responsible for monetary policy, asset management strategy and international monetary cooperation. The Enlarged Governing Board is made up of the three Governing Board members and their deputies, and is responsible for the strategic guidelines for the SNB's business operations. The members of the Enlarged Governing Board are appointed for a term of office of six years by the Federal Council on the basis of a proposal by the Bank Council. Re-election is possible.
Grandfathering perspective (capital)

In the grandfathering perspective on capital, eligible going-concern instruments are defined according to the regulations currently in force. These allow the temporary inclusion of instruments that are not eligible as going-concern capital under the final TBTF requirements. Specifically, the banks can use low-trigger contingent capital instruments (LT CoCos) with Additional Tier 1 (AT1) capital quality up to their first call date in order to comply with the going-concern requirements currently applicable.

Gross domestic product (GDP)

The gross domestic product (GDP) is a measure of an economy's value added. It measures the value of domestically produced goods and domestically rendered services, insofar as they are not used as inputs for the production of other goods and services. The GDP is often used as a reference for a country's economic capacity. In Switzerland, the GDP is calculated by the Federal Statistical Office (FSO). The State Secretariat for Economic Affairs (SECO) publishes a GDP estimate once every quarter. In connection with its monetary policy assessments, the SNB provides estimates of GDP developments for the current and the coming year.

Guidelines on monetary policy instruments
The 'Guidelines of the Swiss National Bank on monetary policy instruments' describe the use of monetary policy instruments. They describe the instruments and procedures for implementing monetary policy under the monetary policy strategy. They set out in detail the transactions described in the National Bank Act which are at the SNB's disposal for performing the monetary policy tasks assigned to it. In particular, they specify the terms on which the SNB concludes transactions and the procedures that are to be observed in such cases. Further, they specify the types of collateral that are eligible for monetary policy transactions involving the SNB.


High-quality liquid assets (HQLA)

High-quality liquid assets (HQLA) are cash or assets that can be converted into cash quickly with no significant loss of value.

High-value deposits

In Switzerland, high-value deposits refer to deposits from retail customers exceeding CHF 1.5 million (cf. annex 2 to the Liquidity Ordinance).

Hold to maturity

For assets and liabilities which banks hold to maturity, effects of interest rate changes materialise gradually through the effect on the corresponding inflows and outflows. Accounting for this gradual effect on earnings (also called earnings approach) is a complement to the standard measure of banks’ interest rate risk, which uses a net present value perspective (i.e. changes in future earnings are immediately reflected in banks’ net present value). The SNB uses an earnings approach in its stress tests.

The term hyperinflation designates an extremely high level of inflation, and is usually used when the monthly rate of inflation exceeds 50%. This corresponds to an annual inflation rate of at least 12,875%.


Impaired claims

Impaired claims refer to claims where it is unlikely that the counterparty will be able to fulfil its future obligations (cf. art. 24 FINMA Accounting Ordinance).

Important monetary policy data
On the first business day of each week, the SNB publishes important monetary policy data from the previous week on its data portal. These data communicate information on the implementation of monetary policy. They include the SNB policy rate, the interest rates on sight deposits, the threshold factor, and the special rate (liquidity-shortage financing facility). They also include information on the amount of sight deposits at the SNB and on the minimum reserves.
Imputed interest rate

The imputed interest rate is a hypothetical interest rate level used for assessing the affordability of a loan at a higher interest rate. At this interest rate, the affordability calculation determines whether the borrower has sufficient financial resources to service the loan.

Independence of the SNB
According to the Federal Constitution and the National Bank Act, the SNB has sole responsibility for monetary policy decision-making and may not seek or accept instructions from other authorities. This independence is intended to ensure that monetary policy is not subverted to short-term political interests. The more independent a central bank, the better it fulfils its mandate. Since monetary policy takes effect with a considerable time lag, central banks must be credible. Independence is a necessary prerequisite for a central bank to develop this credibility. It goes hand in hand with the SNB's accountability to the Federal Council and parliament (accountability report), and the requirement to provide the public with regular information.
Inflation is a sustained increase in the general price level which continues over a longer period of time, corresponding to a loss of the purchasing power of money. However, changes in the prices of individual products (goods and services) or groups of products which reflect a change in the relationship between market demand and supply are not synonymous with inflation. In Switzerland, inflation is measured using the Swiss consumer price index (CPI). The rate of inflation expresses the percentage increase in this index. The target of the SNB's monetary policy is to avoid both inflation and deflation, and thereby to ensure price stability.
Inflation rate
Interest rate curve
Interest rate differential
Investments in different currencies attract different rates of interest, referred to as the interest rate differential. Interest rates in Switzerland have traditionally been lower than those in other countries. The trend towards lower interest rates worldwide in recent years had led to the virtual disappearance of this differential. In order to at least partially restore it, in January 2015 the SNB introduced a negative interest rate as an unconventional monetary policy measure. This had the effect of reducing the attractiveness of investments denominated in Swiss francs versus those in other currencies, which in turn eased the upward pressure on the franc.
Interest rate risk

Interest rate risk measures the impact on a bank’s capital or earnings arising from an adverse movement in interest rates. It results from a mismatch between the repricing maturities of a bank’s assets and liabilities. Banks typically use short-term liabilities (i.e. deposits with potentially short, but contractually undefined, repricing maturities) to refinance long-term assets (i.e. loans with relatively long, but contractually defined, repricing maturities). The result of such maturity transformation, which is a key economic function of banking, is that interest rates on assets are locked in for longer than interest rates on liabilities. As a result, this exposes banks to upward shocks in interest rates.

Interest rate structure
Interest rate structure is a function (curve) which relates the return on fixed-income investments of the same quality to their (residual) maturities (terms). The interest rate structure curve, the graphic representation of the interest rate structure, can be rising (normal), falling (inverse) or flat. A falling curve for government bonds usually indicates an impending recession. Usually the interest rate curve rises, since investors demand a risk premium - and thereby a higher yield - for bonds with longer maturities. The reason for the risk premium is that unforeseen changes in interest rates result in greater price fluctuations in longer-term bonds than in shorter-term bonds.
Interest rate swaps
An interest rate swap is a financial instrument whereby for a specific time period and for a specified nominal value variable interest payments are exchanged against fixed interest payments. The SNB uses interest rate swaps to hedge against interest rate risks in its foreign currency investments.
Interest, nominal
Interest is the return for making a sum of money available for a certain period. It is owed by the debtor to the creditor. Interest is expressed as a percentage of the sum made available (interest rate) and usually refers to a time period of one year. The interest rate evolves according to supply and demand in the money market and capital markets. Its level is also influenced by the duration for which the money is made available and the financial standing (creditworthiness and solvency) of the debtor.
Interest, real
An adjustment of the nominal interest rate for the loss of purchasing power due to inflation leads to the real interest rate. It is thus calculated as the difference between the nominal interest rate and the inflation rate. In other words, the real interest rate is the return on investments adjusted for inflation or the borrowing costs adjusted for inflation respectively.
Interim banknotes

The interim banknotes were the first banknotes issued by the SNB in 1907 and were similar to those of the former issuing banks (the cantonal banks). They circulated alongside the older banknotes for an interim period of three years. From 20 June 1910, only SNB banknotes were legal tender. In September 1911, the first banknotes developed by the SNB itself were issued.

Internal value of money
International investment position

Switzerland's international investment position shows Switzerland's assets and liabilities abroad and Switzerland's net international investment position. The international investment position is made up of direct investment, portfolio investment, derivatives and structured products as well as other assets and liabilities. The assets side also contains the reserve assets. The SNB publishes international investment position data on a quarterly basis in conjunction with the Swiss balance of payments.

International Monetary and Financial Committee (IMFC)
The International Monetary and Financial Committee (IMFC) is the most important management body at the International Monetary Fund (IMF). It holds half-yearly meetings. Switzerland's interests in this committee are represented by the Head of the Federal Department of Finance.
International monetary cooperation
The objective of international monetary cooperation is to promote the functioning and stability of the international monetary and financial system and help overcome crises. The Swiss economy is strongly interconnected with the global economy. In addition, Switzerland is a major financial centre and has its own currency. It therefore derives particular benefit from a stable international monetary and financial system. In the context of international monetary cooperation, the SNB participates in multilateral institutions (e.g. BIS, FSB, IMF), cooperates with the Confederation in providing international monetary assistance (MAA), works on a bilateral level with other central banks and authorities, and acts as the central bank for the Principality of Liechtenstein in accordance with the associated Currency Treaty.
International Monetary Fund (IMF)

The International Monetary Fund (IMF) and the World Bank are the Bretton Woods institutions. The IMF was founded in 1945 with the objective of promoting international cooperation in the field of currency policy and facilitating balanced growth in world trade. Today, practically all of the world's sovereign states are members of the IMF. An important task of the IMF is the surveillance of the economic policies of its member countries within the framework of the Article IV consultations. In addition, the IMF extends loans to countries with balance of payments difficulties. The IMF supports poor countries under the Poverty Reduction and Growth Trust, PRGT. In exceptional crisis situations, the IMF has access to funds under the New Arrangements to Borrow (NAB), in addition to funding through quotas. The IMF also provides technical assistance. Switzerland has been a member of the IMF since 1992 and is part of a constituency. The Federal Department of Finance and the SNB represent Switzerland's interests at the IMF jointly.

International Monetary Fund quota
Every member country in the International Monetary Fund (IMF) holds a capital subscription, or quota, denominated in Special Drawing Rights (SDRs). The IMF determines a member country's quota on the basis of various economic parameters for that country (gross domestic product, current account receipts and expenses and their variability, currency reserves). Quotas are the primary source of IMF funds. They determine the maximum loan amount a country can normally obtain from the IMF. Furthermore, the quota defines a member country's voting power in the IMF and determines the allocation when new SDRs are distributed. The IMF must conduct a general review of quotas in intervals of five years at most and make any necessary changes. At present, the Swiss quota amounts to SDR 5.8 billion. Its quota share thereby comes to 1.21%.
International Monetary Fund reserve position
The SNB reserve position in the International Monetary Fund (IMF) corresponds to the portion of the quota drawn by the IMF. It can be likened to a currency reserve which may be used as such by the SNB at any time.
Intraday facility
Under the standing facilities, the SNB provides its business partners with liquidity during the day to facilitate processing of payment transactions in Swiss Interbank Clearing (SIC) and foreign exchange transactions in Continuous Linked Settlement (CLS). This liquidity is provided interest-free to business partners and must be covered by collateral eligible for SNB repos.
Intraday loan
An intraday loan is a loan with a term of less than one business day. The aim of this loan is to facilitate smooth payment processes in payment systems. Central banks generally grant intraday loans free of interest. The SNB makes intraday loans available to banks under the intraday facility.
Investment policy guidelines
The 'Investment policy guidelines of the Swiss National Bank' detail the transactions described in the National Bank Act which the SNB may enter into in order to perform its investment policy tasks. They define the scope of the SNB's investment activity. In addition to investment policy principles and details on the investment instruments, the guidelines also lay down specifications for the investment and risk control process.


According to the Federal Act on Currency and Payment Instruments, legal tender in Switzerland comprises coins issued by the federal government, banknotes issued by the SNB, and SNB sight deposits in Swiss francs. In general, legal tender must be unconditionally accepted as payment, unless contractual arrangements have been made to the contrary.
Lender of last resort
Leverage ratio

The leverage ratio is calculated as the bank’s regulatory capital divided by the bank’s total exposure (calculated in accordance with Basel minimum standards).

Libor (London Interbank Offered Rate)
The Libor (London Interbank Offered Rate) refers to the average interest rate at which a bank can obtain unsecured loans for a certain term and in a certain currency. The average calculated from the data submitted by banks is fixed and published as the Libor for the day in question. Against the background of international reform efforts in the area of reference interest rates, the UK's Financial Conduct Authority announced in July 2017 that it would no longer support the Libor after 2021. The National Working Group on Swiss Franc Reference Rates recommended SARON as the alternative to the Swiss franc Libor in Switzerland. The SNB used the three-month Swiss franc Libor as the reference interest rate in its monetary policy strategy up to June 2019, after which it was succeeded by the SNB policy rate. The SNB seeks to keep the short-term Swiss franc money market rates close to the SNB policy rate, and is focusing on SARON. The Swiss franc Libor was discontinued at the end of 2021.
Liquidity has three meanings in economics. First, liquidity is defined as the ability to meet all claims that fall due, at any time and without restriction. Second, liquidity describes the funds required for this purpose. Third, a market is considered liquid if transactions, including larger ones, can be effected without triggering significant price movements. Under the Banking Act, Swiss banks must ensure that they hold sufficient liquidity. Accordingly, a bank or group of banks is referred to as illiquid if it does not have sufficient liquid assets to meet all short-term claims. A bank can be solvent but nonetheless illiquid: while it may have sufficient assets to cover all debts and not be over-indebted, it may not have sufficient liquid assets to meet all short-term liabilities. To manage their liquidity, banks depend on the money market. By managing the liquidity on the money market, the SNB implements its monetary policy.
Liquidity Coverage Ratio (LCR)

The Liquidity Coverage Ratio (LCR) is calculated as a bank’s high-quality liquid assets (HQLA) divided by its total net cash outflows (NCO) over the next 30 calendar days. The LCR regulatory requirement stipulates that this ratio must be greater than or equal to 100%. This ensures that financial institutions maintain an ongoing ability to meet their short-term obligations (i.e. cash outflows for 30 days). The Basel Committee on Banking Supervision (BCBS) introduced the LCR as part of the Basel III post-crisis reforms. In Switzerland, the LCR is governed by the Liquidity Ordinance.

Liquidity swap agreements

Liquidity swap agreements between the SNB and other central banks enable the SNB to provide financial market participants in Switzerland with the foreign currency - mainly US dollars - that they need. They also allow the SNB to provide Swiss francs to central banks abroad, who are then, in turn, able to make these Swiss francs available to their counterparties.

Liquidity-shortage financing facility
The liquidity-shortage financing facility is a line of credit for commercial banks and financial market infrastructures to cover their short-term funding shortfalls, and is provided by the SNB as part of its standing facilities. The facility can be accessed via special-rate repo transactions, up to the limit set by the SNB. The liquidity-shortage financing facility is part of the SNB's set of monetary policy instruments, but is not an open market operation.
Loan-to-income (LTI) ratio

At banks, the loan-to-income (LTI) ratio describes the ratio between the loan amount and the borrower's income that is relevant to service the loan. In the case of a mortgage loan, the relevant income would be rental income if the underlying property is rented out, and household income if the property is owner-occupied. The higher the LTI ratio, the higher the affordability risk of the loan.

Loan-to-value (LTV) ratio

The loan-to-value (LTV) ratio describes the ratio of the loan to the value of the collateral pledged. In the case of a mortgage loan, the value would be the market value of the pledged property or the mortgage lending value. The LTV ratio is a measure of potential loss in the event of a default on the mortgage loan. Mortgage loans with high LTV ratios are most exposed to a price correction in the real estate market.

Look-through perspective (capital)

In the look-through perspective on capital, eligible going-concern instruments are defined according to the final capital quality requirements of the Swiss TBTF regulations, i.e. after expiry of all transitional provisions. Going-concern capital in the look-through perspective is made up of Common Equity Tier 1 (CET1) capital and high-trigger contingent capital instruments (HT CoCos) that qualify as additional Tier 1 (AT1) capital.


M0 monetary aggregate
M1 monetary aggregate
The SNB defines the M1 monetary aggregate as the sum of currency in circulation, sight deposits held at banks, and deposits in transaction accounts at banks, i.e. accounts used mainly for payments. Only positions denominated in Swiss francs and held by residents are taken into consideration.
M2 monetary aggregate
The SNB defines the M2 monetary aggregate as the sum of the M1 monetary aggregate plus savings deposits held at banks. Excluded from the savings deposits are pension fund monies invested in schemes with restricted terms and tax benefits within the framework of the mandatory occupational pension scheme (pillar 2) and individual, voluntary pension schemes (pillar 3).
M3 monetary aggregate
The SNB defines the M3 monetary aggregate as the sum of the M2 monetary aggregate plus time deposits held at banks (liabilities arising from customer time deposits, and money market instruments).
Macroprudential measures
Macroprudential measures aim to safeguard or restore the stability of a financial system. This is accomplished by strengthening the resilience of the financial system and by countering the accumulation of systemic risk. Macroprudential measures affect the Swiss banking sector as a whole, and not just individual financial market participants. A good example is the countercyclical capital buffer, which was introduced in Switzerland on 1 July 2012.
Mandate refers to the SNB's statutory tasks. The Federal Constitution entrusts the Swiss National Bank, as an independent central bank, with the conduct of monetary policy in the interests of the country as a whole. The National Bank Act sets this out in detail, explaining that the SNB is required to ensure price stability and, in so doing, to take due account of economic developments.
Mark to market

In the context of measuring banks’ interest rate risks, a mark-to-market valuation of their assets and liabilities reflects the current economic value of these positions, as derived from the future discounted cash flows from these positions under various interest rate scenarios.

Market capitalisation

Market capitalisation refers to the total value of all shares of a company. It is calculated by multiplying the current stock price by the total number of shares outstanding.

Market risk

Market risk is the risk of loss arising from movements in market prices. Important factors for banks’ market risk are equity, bond and commodity prices as well as interest rates and exchange rates.

Maturity transformation

Maturity transformation occurs when assets are funded by liabilities and their repricing maturities differ. At banks, maturity transformation is a core economic function and results from using short-term liabilities (e.g. savings accounts) to fund long-term assets (e.g. fixed-rate mortgages).

Minimum exchange rate

The minimum exchange rate was a lower limit defined by the SNB for an exchange rate on the foreign exchange market, which it would not allow to be breached. From 6 September 2011 to 15 January 2015, a minimum exchange rate of CHF 1.20 per euro was in place, meaning that the SNB would not allow the exchange rate to fall below this level. The SNB enforced this minimum exchange rate with the utmost determination, and, to this end, was prepared throughout this period to purchase foreign currency in unlimited quantities (foreign exchange market interventions). The purpose of the minimum exchange rate was to counter an exceptional overvaluation of the Swiss franc, as well as the associated threat of a deflationary trend (deflation), and thereby to ensure monetary conditions that were appropriate for the Swiss economy. On 15 January 2015, the SNB discontinued the minimum exchange rate due to developments in the major currency areas. The minimum exchange rate was an unconventional monetary policy measure.

Minimum requirement (capital)

The minimum capital requirements for banks are equal to 8% in terms of risk-weighted capital ratio, and 3% in terms of leverage ratio. If a bank falls below a minimum requirement, FINMA may order protective measures, restructuring or bankruptcy proceedings (cf. art 25 Banking Act).

Minimum reserves

In order to facilitate the smooth functioning of the money market, banks are required to hold minimum reserves against a certain percentage of their Swiss franc short-term liabilities (e.g. customer deposits). Valid minimum reserves comprise Swiss franc coins, banknotes and sight deposits held at the SNB. Details on fulfilment of the minimum reserve requirement are published on the SNB's data portal under 'Important monetary policy data'. The minimum reserves form the basis for calculating the thresholds for the domestic banks.

Monetary aggregates
The monetary aggregates are different categories of the money supply. The SNB's most important monetary aggregates are the monetary base and the M1, M2 and M3 monetary aggregates.
Monetary Assistance Act
The Federal Act on International Monetary Assistance (Monetary Assistance Act) enables Switzerland to participate in financial assistance aimed at preventing or remedying serious disruptions in the international monetary system (systemic assistance). This law also forms the basis for Switzerland's participation in special funds of the International Monetary Fund (IMF), especially for the financing of loans to low-income countries at concessional interest rates via the Poverty Reduction and Growth Trust, and enables the granting of loans to countries with which Switzerland cooperates particularly closely. The Federal Council may commission the SNB to finance loans for systemic aid, with the Confederation guaranteeing repayment. It may also mandate the SNB - subject to the latter's approval - to assume responsibility for the participation in special funds of the IMF, with the repayment of the loan also guaranteed by the Confederation. Short or medium-term loans granted to individual countries that cooperate closely with Switzerland are financed by the Confederation. The Federal Decree on International Monetary Assistance provides a credit ceiling of CHF 10 billion for the financing of guarantees and loans within the context of bilateral and multilateral monetary relations.
Monetary base
The monetary base is composed of the sum of banknotes in circulation plus sight deposits of domestic commercial banks held at the SNB. Other terms used for the monetary base include the M0 monetary supply and monetary stock.
Monetary conditions
Monetary conditions are shaped by interest rates and by the exchange rate. The SNB maintains price stability by using its monetary policy instruments to ensure that monetary conditions are appropriate for the Swiss economy.
Monetary policy
Monetary policy is the implementation of monetary policy instruments by the central bank to achieve economic policy goals. Like fiscal policy, monetary policy is therefore a branch of economic policy. The SNB conducts its monetary policy in the interests of the country as a whole. By seeking to keep prices stable (price stability), the SNB helps to create an environment in which the economy can best exploit its production potential. The SNB's instruments include open market operations (repo transactions, the issuance of SNB Bills, foreign exchange swaps, the purchase and sale of foreign currency and securities), interest on sight deposits, as well as standing facilities (intraday facility, liquidity-shortage financing facility, SNB COVID-19 refinancing facility).
Monetary policy assessment
As a rule, the SNB conducts a monetary policy assessment every quarter. Based on economic developments both domestically and abroad as well as monetary conditions in Switzerland, the SNB Governing Board decides whether monetary policy is to remain unchanged, or be tightened or eased.
Monetary policy instruments

The SNB's monetary policy instruments comprise the operations and measures, as laid out in the National Bank Act and the 'Guidelines on monetary policy instruments', that it requires to carry out its monetary policy. These include open market operations (repo transactions, foreign exchange swaps, foreign exchange market interventions, the issuance and repurchase of SNB Bills) as well as the standing facilities (liquidity-shortage financing facility, intraday facility). Interest on sight deposits held at the SNB also counts as a monetary policy instrument.

Monetary policy strategy
The monetary policy strategy refers to the way in which the SNB aims to fulfil its statutory mandate of ensuring price stability. The strategy, which has been in place since December 1999, consists of three elements: a definition of price stability, a conditional inflation forecast over the subsequent twelve quarters, and the SNB policy rate, which replaced the target range for the three-month Swiss franc Libor in June 2019.
Monetary sovereignty
In Switzerland, monetary sovereignty is held by the Swiss Confederation, which entitles it to pass statutes on the banknote and coinage system (i.e. determine the currency unit, designate the authority responsible for issuing the money, determine denominations, etc.). In the National Bank Act, the Confederation confers the exclusive right to issue banknotes (note-issuing privilege) on the SNB. Further provisions on the banknote and coinage system are contained in the Federal Act on Currency and Payment Instruments.
Monetary stability
The term monetary stability has two dimensions: In the domestic economy, monetary stability is usually equated with price level stability and implies a constant level of domestic purchasing power of money (value of money). In the external dimension, by contrast, monetary stability implies the stability of the nominal exchange rate.
Monetary value

Monetary value is the purchasing power of money and expresses the volume of goods that can be bought for a monetary unit. A distinction may be made between the internal and external value of money. The internal value corresponds to the reverse value of the price level. When the price level rises, the volume of goods that can be purchased for a monetary unit decreases, and vice versa. Consequently, the price level and purchasing power of money always exhibit contrary development. The external value of money is the amount of foreign currency which can be purchased for a domestic monetary unit. The external value corresponds to the exchange rate in the indirect quotation.

Money is the generally accepted medium of exchange. It also serves as a store of value and unit of account (measure of value). In Switzerland, banknotes and coins (cash), as well as book money, are all referred to as money.
Money creation
This is the process by which money is created. On the one hand, the SNB is entitled to create money, because of its note-issuing privilege. On the other, commercial banks can create book money, by granting loans. Their means of creating book money are determined by the requirements of Swiss law regarding minimum reserves, and by the SNB's readiness to increase or reduce the money supply. Using its monetary policy instruments, the SNB indirectly steers interest rates on the money market, and thereby also the supply of money in Switzerland, via the demand for credit (higher interest rates means lower demand for credit and less money creation, and vice versa).
Money market
The money market is the market for raising and investing short-term liquidity. Short-term liquidity is defined as liquidity with a term of up to one year (for longer-term investments, cf. capital market). Loans are not covered on the unsecured money market, and covered on the secured money market (e.g. via repo transactions). As part of its monetary policy, the SNB steers the interest rate level on the money market. Banks use the money market to balance and manage their liquidity. Commercial banks conduct money market transactions with each other on the interbank market.
Money Market Debt Register Claims (MMDRCs)
Money Market Debt Register Claims (MMDRCs) are a money market instrument with which the Swiss Confederation raises short-term funds. First issued by the Confederation in 1979, MMDRCs have since become firmly established in the Swiss money market. As a rule, maturities range from three to twelve months. Interest on MMDRCs is paid on a discount basis, i.e. the debt register claims are issued below or above par (where par is equivalent to 100%) and repaid at nominal value. MMDRC issues are effected in the form of auctions, which are carried out by the SNB, as banker to the Confederation.
Mortgage lending value
The mortgage lending value is the value of the mortgaged property that is used by the lender as the basis for the granting of the mortgage loan against the mortgaged property as collateral. Depending on the lending policy of the loan-granting institution, the mortgage lending value can equal the purchase price, the investment costs, the revenue value or the market value of the mortgaged property. It may, however, also be set lower (e.g. in the case of cautious valuation) or higher (e.g. in the case of purchase at a preferential price).
Mortgage loan
A mortgage loan is a loan against collateral in the form of property (pledged or involving the transfer of title deeds).


National Bank
National Bank Act (NBA)

The National Bank Act (NBA, Federal Act on the Swiss National Bank) is the legal basis underlying the SNB's activities as Switzerland's central bank. It contains provisions relating to the SNB as joint-stock company, its organisation and its tasks.

National Bank Ordinance
The National Bank Ordinance contains provisions governing the implementation of the National Bank Act in the areas of statistics, minimum reserves and oversight.
National Working Group on Swiss Franc Reference Rates (NWG)
The NWG brought together the relevant stakeholders in the reference interest rate reform process, with a focus on the transition from Libor to SARON. The SNB supported the NWG by running the technical secretariat and publishing important information on its website. The NWG disbanded in accordance with its statutes in March 2022.
Negative goodwill

Negative goodwill is an accounting gain which arises when the purchase price for a company is lower than the difference between the value of the assets acquired and the liabilities assumed.

Negative interest
Between January 2015 and September 2022, the SNB charged negative interest on sight deposits held at the SNB by banks and other financial market participants that exceeded a certain exemption threshold. The negative interest rate corresponded to the SNB policy rate.
Net cash outflows (NCO)

Total net cash outflows (NCO) are defined as the total expected cash outflows minus the total expected cash inflows arising in a liquidity stress scenario over 30 calendar days.

Net fee and commission income

At banks, net fee and commission income is the difference between their fees and commissions received for services and the expenses incurred in earning that income.

Net interest income

At banks, net interest income is the difference between the revenue generated from their interest-bearing assets and the expenses associated with their interest-bearing liabilities (cf. FINMA Circular 2020/1 Rechnungslegung – Banken).

Net interest margin

At banks, the net interest margin is a measure of the net return of their interest-bearing business, i.e. the core business of domestically focused banks in Switzerland. In the SNB’s analysis, net interest margins are approximated as net interest income divided by interest-bearing assets.

Net present value (NPV)

In the context of measuring banks’ interest rate risks, net present value (NPV) is the difference between discounted cash inflows and outflows associated with a bank’s balance sheet. It thus represents a bank’s economic value under various interest rate scenarios.

Net trading income

At banks, net trading income corresponds mainly to gains and losses from trading activities and valuation adjustments of positions for which the fair value option has been chosen (cf. FINMA Circular 2020/1 Rechnungslegung – Banken).


Netting is the agreed offsetting of reciprocal positions or liabilities by counterparties or system participants. It reduces a large number of individual positions or liabilities to a smaller number of positions or liabilities.

Network for Greening the Financial System, NGFS

The NGFS was founded in 2017 and serves as a forum in which central banks and supervisory authorities can discuss the risks climate change poses to the economy and the financial system. Within the framework of the NGFS, institutions are examining how best to counter such risks and fund the transition to more sustainable economic activity. Since becoming a member of the NGFS in 2019, the SNB has been engaging in dialogue in order to better gauge the potential impact of climate risks on macroeconomics and financial stability.

New Arrangements to Borrow (NAB)

The New Arrangements to Borrow (NAB) represent a financial safety net for the International Monetary Fund (IMF). In addition to its regular resources, the IMF can be provided with up to SDR 361 billion (SDR, special drawing rights) by means of NAB. NAB are activated for a specified period (six months at most) and a specified amount. The SNB takes part in the NAB on behalf of Switzerland.

Nominal interest rate
Non-performing loan ratio

The non-performing loan ratio describes the ratio of loans for which the interest or amortisation is outstanding for more than 90 days to total gross loans.

Note-issuing privilege
The National Bank Act gives the SNB the exclusive right to issue Swiss banknotes. The SNB thus holds the banknote monopoly. The SNB issued its first banknotes on 20 June 1907, on the day it took up business (interim banknotes).


Off-balance-sheet positions

An off-balance-sheet position is a contract or financial instrument that is currently not reflected on the bank’s balance sheet but may result in an asset or liability in the future. Examples for banks are derivatives, such as total return or credit default swaps, guarantees, or undrawn credit commitments.

Open market operations
An open market operation is the purchase or sale of securities or other claims on the money market or capital market by a central bank. In contrast to standing facilities, the use of open market operations is initiated by the central bank, rather than a commercial bank. The SNB mainly uses open market operations, which belong to the monetary policy instruments, to manage the monetary base and thereby implement its monetary policy. Open market operations of practical relevance for the SNB include repo transactions, foreign exchange market interventions, foreign exchange swaps and securities transactions.
Operational risk

At banks, operational risk is the risk of loss due to inadequate procedures, fraud, failed internal systems, or external events. It also includes legal risk, cyber risk and events such as a power shortage.

Organisation for Economic Co-operation and Development (OECD)

The Organisation for Economic Co-operation and Development (OECD) aims to promote and coordinate the economic, monetary and development policies of its member states. Switzerland is a founding member of the OECD. Together with the federal government, the SNB represents Switzerland on various committees in the area of international monetary cooperation. Every two years, the OECD performs a detailed analysis of the economy of every member country.

Output gap
Over-the-counter (OTC) trading
Securities transactions not conducted via a stock exchange are referred to as over-the-counter (OTC) trading. Many derivatives, too, are traded on so-called OTC derivatives markets. Due to their strong international interconnectedness, large trade volumes and default risks, OTC derivatives markets constitute a potential threat to the stability of the financial system. According to the recommendations of the G20 and the Financial Stability Board (FSB) to increase the transparency, integrity and stability of the OTC derivatives markets, the intention is therefore in particular to have standardised OTC derivatives cleared through central counterparties.