Is it serious or what? – The Swiss National Bank (BNS) has been making waves in recent days by posting a record loss of 142.2 billion Swiss francs in the first months of the year 2022. Of course, a central bank is not quite a bank like the others and we are not talking about the risk of bankruptcy, even in a case like that. However, the situation worry observers who fear consequences on the budget from the country. A few weeks later Credit Suisse announcements, would the economic situation among our Swiss friends begin to turn sour?
140 billion Swiss francs in losses over the first 9 months of the year
For the sake of transparency, the BNS publishes each quarter the details of the evolution of its reservations monetary. These are the devises foreign, ofor physical, actions and obligations that it holds and their value in Swiss francs at time T. As a reminder, at present, 1 franc Swiss being equal to 0,99 euroall figures expressed will be in Swiss francs (CHF).
The last balance sheet she produced corresponds to the first nine months of the year and the figures are not good. This is, in fact, the largest loss of value ever recorded by the SNB in 115 ans of history. To give an order of magnitude, 142 billion corresponds to the GDP of a country like Morocco! But comment have we come to this and what will be the consequences for Switzerland?
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To explain the situation, Swiss economists point to the economic situation macroeconomic particularly unfavorable at the start of the year. First of all, the SNB has devises foreign in his reserves which made him lose 141 billion due to price declines and exchange rate fluctuations. Then the stock value oforthough unchanged, lost 1.1 billion because of the recoil yellow metal.
We continue with the interests and the dividends on various financial products that cost him 8.5 billion what’s more. Finally, and this is a bit more technical, it applied rates negatives on certain bank assets which have finished weighing down its balance sheet. Far from being alarmist, local economists demystify the situation by relativizing and contextualisant these results.
Is it serious doctor ?
This is howAlessandro Beean economist with the Union of Swiss Banks (UBS) made the following statement:
“These losses may seem significant, but the SNB is not a normal business. The problem is the stagflationary environment where stocks lose, bonds lose, gold loses and the Swiss franc strengthens. Normally, bonds and gold gain when stocks lose. But that didn’t happen in 2022.»
The consequences possible will perhaps be a decrease of the SNB’s allocation to the Swiss Confederation as well as to the various cantons of the country, or even a lack of payment for the 2022 financial year, which is extremely rare. But again, Martin Schlegel, the vice-president of the SNB tried to reassure his world by explaining that the bank could continue its missions even with negative equity. Before concluding with a laconic: “ nevertheless, it contributes to the credibility of a central bank to be well capitalized. »
In the end, the figures are impressive, but it is the balance sheet at the moment T and which simply corresponds to the value of the assets during the day. And, as they say in crypto, “not sold, not lost”! All of this will be better tomorrow when the markets return to the north. Because if bank officials aren’t worried, why should we be? And then, after all, the central bankers who are in charge of our economies know what they are doing, right?
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