The Swiss National Bank reported an annual loss of 132.5 billion Swiss francs ($141.54 billion) on Monday, in line with the preliminary figures released in January.
The loss, the largest in the central bank’s 115-year history, was caused by a drop in the value of the SNB’s investments due to last year’s bond and stock market declines.
A strengthening of the Swiss franc had a negative impact as well, reducing the SNB’s holdings and returns on foreign investments when converted back into Swiss francs.
The loss, which comes after a profit of 26 billion Swiss francs in 2021, means the SNB will make no payments to Swiss central or regional governments or dividends to investors for only the second time since its inception in 1907.
The majority of last year’s shortfall could be attributed to the 131.5 billion francs lost on foreign currency positions, with its bond holdings losing 72 billion francs and its share portfolio losing 41 billion francs in value.
The reported loss wiped out the SNB’s distribution reserve of 102.5 billion francs, leaving the central bank with a net loss of 39.5 billion francs after provisions were allocated.
The SNB, which is scheduled to release its next monetary policy update on March 23, declined to comment on how the loss might affect future monetary policy.
Analysts did not believe it would have an impact because the SNB still has 66 billion francs in equity despite the massive losses.
“Even if equity was wiped out altogether this wouldn’t change monetary policy in the short term as the SNB can operate without equity,” said UBS economist Alessandro Bee.
“Only in the case of a prolonged period of negative equity I would see an impact on monetary policy. But we’re far from such a scenario even after the huge loss of last year.”
(Adapted from Nasdaq.com)
Categories: Economy & Finance, Strategy, Sustainability, Uncategorized
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