Swiss National Bank sees loss of $23 billion for 2015

GENEVA -- The Swiss National Bank says it expects to post a massive loss of 23 billion Swiss francs ($23 billion) for 2015, largely because of its decision a year ago to ditch a policy that limited the export-sapping rise of the national currency.

See Full Article

In a statement Friday, it said 20 billion francs of the loss was due to declines in the value of the bank's foreign currency holdings. A further 4 billion loss came from declining gold prices while a 1 billion gain emerged from holdings of Swiss currency holdings. Fuller details will be published on March in the central bank's annual report.

The disclosure reveals the cost of the SNB's decision on Jan. 15, 2015 to abandon the centerpiece of its monetary policy: pegging the franc to the euro to make sure it didn't rise too much.

The peg, which was introduced in Sept. 2011, was an attempt to halt the rise of the franc -- a traditional safe haven currency for investors -- against the euro at a time when the eurozone debt crisis was at its height. The strong franc was then particularly problematic for Swiss exporters, who were forced to drastically cut prices to remain competitive.

That policy was getting increasingly expensive to defend as the euro weakened in global markets amid growing expectations that the European Central Bank was preparing a massive stimulus program for the ailing 19-country eurozone economy. Such stimulus tends to weigh on a currency's value.

To defend the peg against a weakening euro, the SNB had to increasingly buy euros and sell the franc. But the cost of doing so became prohibitive. It finally ditched the peg in January, a week before the ECB announced its new stimulus.

The SNB's decision to call time on the policy saw the Swiss franc surge immediately on foreign exchange markets. Within minutes of the announcement, the franc spiked around a third against the euro and the dollar.

Though the franc drifted down from those heights over the course of 2015, it still ended the year around 10 per cent higher against the euro. That constituted the bulk of the SNB's loss. Against the dollar, it ended the year broadly flat as the U.S. currency appreciated strongly ahead of the Federal Reserve's widely expected decision in December to raise interest rates for the first time in nearly a decade.



Advertisements

Latest Economic News

  • Trade war with U.S. could lead to recession in Canada, Mexico, Scotiabank predicts

    Economic CBC News
    A new analysis of escalating trade disputes involving the United States warns that a deterioration into an all-out, global trade war would knock North America's economies into recession. The report by Scotiabank said if the U.S. Source
  • Ramifications of a trade war: an expert look at the numbers for Canada

    Economic CTV News
    OTTAWA -- A new analysis of escalating trade disputes involving the United States warns that a deterioration into an all-out, global trade war would knock North America's economies into recession. The report by Scotiabank said if the U.S. Source
  • From marijuana beer to pot cookies, Canadian companies creating cannabis edibles

    Economic CTV News
    VANCOUVER -- Beer brewed with marijuana, baking mixes concocted to bring out the unique flavours of cannabis oil and good, old-fashioned pot cookies: Canadian companies are creating them all, but it's unclear when stores will legally be able to stock the edibles for recreational users. Source
  • How the dairy industry complicates the quest for better butter

    Economic CBC News
    Four years ago, I had a butter epiphany. My family was planning a trip to France and before we left, a foodie friend told me that I had to try French butter. Of all the possible foods to try in France, it seemed an odd recommendation. Source
  • Koodo goes paperless and new WestJet-RBC rewards program: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Don't panic. CBC's Marketplace rounds up the consumer and health news you need. Want this in your inbox? Get the Marketplace newsletter every Friday. Koodo wants to eliminate paper bills Telus's discount wireless brand is shifting entirely to e-billing, but customers are defending the use of snail mail. Source
  • Moncton realtor dances 'The Floss' in bid to sell house

    Economic CTV News
    MONCTON, N.B. -- A New Brunswick realtor opted to think on his feet in a bid to sell a four-bedroom house near Moncton. Dylan Mahaney, 27, dances around the house to the 1980s classic "Take On Me" in a sales video that's gaining traction on Facebook. Source
  • China hikes tariffs on U.S. soybeans, electric cars, fish

    Economic CTV News
    BEIJING -- China fired back Saturday in a spiraling trade dispute with U.S. President Donald Trump by raising import duties on a $34 billion list of American goods including soybeans, electric cars and whiskey. The government said it was responding in "equal scale" to Trump's tariff hike on Chinese goods in a conflict over Beijing's trade surplus and technology policy that companies worry could quickly escalate and chill global economic growth. Source
  • Get ready for auto tariffs, U.S. congressman warns

    Economic CBC News
    U.S. President Donald Trump isn't playing around — and Canada should brace itself for new tariffs on autos, U.S. Congressman Kevin Cramer warned this week. "We have to take him at his word," Cramer, a Republican from North Dakota, told CBC Radio's The House on Friday. Source
  • Did you hear the one about the vegan cafe that moved next to a butcher shop?

    Economic CBC News
    John Wildenborg had just settled into the new home for his decades-old shop, Master Meats. He'd found a great location — an airy space with room for both his stock and keepsakes, which includes mementos from when he taught actors on the TV crime drama Fargo how to handle a cleaver. Source
  • Vote with your dollars, business analyst urges after Trump's G7 comments

    Economic CBC News
    Much of the global business community watched, listened and read U.S. president Donald Trump's comments during and following the G7 summit last week and for a Calgary business analyst, it was the last straw. "It certainly feels like a trade war," Ashleigh Hislop told CBC News Friday. Source