The Swiss national flag hangs at the Federal Palace, the Swiss parliament building, in Bern, Switzerland, Thursday, Dec. 13, 2018. The Swiss National Bank cut its inflation forecast and showed no intention of exiting its crisis parameters, citing the strength of the franc and rising global risks. Photographer: Stefan Wermuth/Bloomberg via Getty Images
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The Swiss National Bank reported a loss of 132 billion Swiss francs ($143 billion) for the 2022 financial year on Monday, citing preliminary figures.
It represents the biggest loss in the central bank’s 116-year history and is equivalent to around 18% of Switzerland’s gross domestic product, which stands at 744.5 billion Swiss francs. Its previous record loss was 23 billion francs in 2015.
As a result, it will not make its usual payments to the Swiss government and member states, it said, with payments to its shareholders also expected to be affected. In 2021, the bank made a profit of 26 billion francs.
Among the losses, 131 billion francs came from its currency positions and 1 billion from its Swiss franc positions amid strong gains made by the franc as investors flocked to the perceived safe haven amid European volatility.
Since June 2022, the Swiss franc has been trading above the euro, a level it had previously only briefly reached in 2015 after dropping its 1.20 peg to the EU single currency. Switzerland has always tried to curb the strength of the franc due to its heavily export-oriented economy, although analysts have argued that Swiss companies have been able to remain competitive despite the franc rising due to eurozone inflation.
In December, the Swiss National Bank raised interest rates for the third time in 2022, to 1%. This was to counter inflation of 3%, well below the inflation rate in the euro zone, which remains above 10%.
The SNB was also affected last year by losses in its equity and bond portfolio in the context of the general market decline. However, he earned 400 million francs from his gold holdings.
Karsten Junius, chief economist at Swiss bank J.Safra Sarasin, told Reuters the central bank’s losses would not change its monetary policy. “The SNB’s high reputation helps to not change anything,” he said. CNBC has contacted the SNB for comment.