Zurich, Switzerland – Swiss National Bank (SNB) said on Monday it lost 142.2 billion Swiss francs ($142.60 billion) in the first nine months of 2022 – the largest in the SNB’s 115-year history – due to higher interest rates and a stronger Swiss franc which reduced the value of its foreign investments, Reuters reported.
The scale of the loss can be gauged from the fact it is slightly more than the annual economic output of Morocco ($132 billion).
Despite this, the SNB is not facing bankruptcy due to its ability to create money.
A total of 141 billion francs were lost on foreign-currency positions after bonds and stocks bought during the campaign to stem the appreciation of safe-haven franc fell. It included 24.4 billion losses in its stakes in coffee retailer Starbucks and Google owner Alphabet.
The value of gold holdings decreased by 1.1 billion francs.
“These losses may sound like a lot, but the SNB is not a normal company,” said UBS economist Alessandro Bee, quoted by Reuters. “The problem is the stagflationary environment where equities lose, bonds lose, gold loses and the Swiss franc becomes stronger. Normally bonds and gold gain when equities lose. But that’s not happened in 2022.”
The loss could, however, mean that the SNB halts payouts to the Swiss federal and cantonal governments next year.
Earlier in September, the SNB raised interest rate by 0.75 percentage points to 0.5 percent as global monetary policymakers ramped up the battle against runaway inflation. Inflation in Switzerland rose 3.5 percent in August.
