Swiss National Bank (SNB)

What is the Swiss National Bank?

The Swiss National Bank (Schweizerische Nationalbank in German, Banque nationale suisse in French) is the central bank of Switzerland. Established in 1907, it operates under a special mandate defined by the Swiss Constitution and the National Bank Act.

Primary Mandate and Responsibilities

Price Stability

The SNB's primary mandate is to ensure price stability in Switzerland, which it defines as keeping inflation below 2% per year. This involves:

• Setting the policy interest rate (SNB policy rate)
• Monitoring inflation trends and economic indicators
• Taking measures to prevent deflation or excessive inflation
• Publishing quarterly inflation forecasts

Currency Management

The SNB manages the Swiss franc (CHF) and may intervene in foreign exchange markets:

• Preventing excessive franc appreciation that could harm the economy
• Maintaining foreign currency reserves (one of the world's largest)
• Issuing banknotes and overseeing coin production
• Ensuring adequate cash supply throughout Switzerland

Financial System Stability

The SNB contributes to financial system stability through:

• Overseeing systemically important payment and securities settlement systems
• Monitoring financial market developments
• Cooperating with other regulatory authorities
• Acting as lender of last resort for banks when necessary

Organizational Structure

Governing Bodies

• Governing Board: Three members who make monetary policy decisions
• Bank Council: Supervisory body with 11 members
• Audit Board: Independent auditing and risk assessment

Locations

• Bern: Main headquarters
• Zurich: Second headquarters
• Regional offices: Basel, Geneva, Lausanne, Lucerne, Lugano, St. Gallen

Key Policy Tools

Policy Interest Rate

The SNB's main monetary policy tool:

• Currently at 1.75% (as of 2024)
• Influences short-term money market rates
• Affects lending and deposit rates throughout the economy
• Reviewed quarterly at monetary policy assessments

Foreign Exchange Interventions

The SNB may intervene in currency markets:

• Purchasing foreign currencies to weaken the Swiss franc
• Building substantial foreign currency reserves
• Notable intervention: EUR/CHF floor of 1.20 (2011-2015)

Liquidity Provision

Ensuring adequate liquidity in the Swiss financial system:

• Repo operations with banks
• Standing facilities for overnight borrowing/lending
• Emergency liquidity assistance when needed

Independence and Accountability

Independence

The SNB operates with significant independence:

• Government cannot issue instructions on monetary policy
• Board members serve six-year terms
• Financial independence through its own balance sheet
• Legal protection against political interference

Accountability

Despite independence, the SNB maintains accountability:

• Regular reports to the Federal Assembly (Parliament)
• Quarterly monetary policy assessments and press conferences
• Annual accountability report
• Public communication of policy decisions and reasoning

International Role

International Cooperation

• Bank for International Settlements (BIS): Active member and host
• International Monetary Fund (IMF): Collaboration on global issues
• Central bank networks: Participation in various international forums
• Currency swap agreements: With major central banks

Current Challenges and Focus Areas

Economic Environment

• Managing the strong Swiss franc in global uncertainty
• Dealing with low global interest rates
• Monitoring inflation developments post-COVID
• Climate-related financial risks assessment

Digital Innovation

• Research on central bank digital currency (CBDC)
• Modernizing payment systems
• Monitoring cryptocurrency developments
• Ensuring financial system resilience to technological changes

Comparison with Other Central Banks

Similar Central Banks

• Bank of England (UK): Similar mandate but includes employment considerations
• European Central Bank (ECB): Price stability focus for Eurozone
• Federal Reserve (USA): Dual mandate including employment
• Bank of Japan: Similar challenges with currency strength

Impact on Daily Life

For Residents

• Interest rates: Influences mortgage and savings rates
• Inflation: Affects purchasing power and cost of living
• Currency stability: Important for international travel and imports
• Financial stability: Protects savings and pensions

For Businesses

• Export competitiveness: Currency policy affects international trade
• Financing costs: Interest rates influence business investment
• Planning certainty: Stable monetary policy supports business decisions

Last updated: September 2025