Tag Archives: newsletter

Since the financial crisis central banks in developed nations increased their balance sheets. The leading one was the American Federal Reserve that increased the monetary base (M0, often called “narrow money”), followed by the Bank of Japan and recently the ECB. In most cases the extension of narrow money did neither have an effect on banks’ money supply, the so called “broad money” (M1-M3), nor on price inflation. For the Swiss, however, the rising money supply concerned both narrow and...

Swiss GDP increased by 0.2% q/q and 1.2% y/y. Once again, investments on equipment and software (+3.6%) was one of the main drivers. For many economists investment on equipment and software is the most desired GDP growth component. SECO: Gross domestic product in 2nd quarter 2015  (source)Each quarter, the Swiss department of economics (SECO) estimates the GDP and its components. The main purpose of these estimations is to provide data that allows for an assessment of the cyclical...

National accounts in Switzerland in 2014 Press Release by Swiss Statistics (FSO) Foreign trade the main source of growth Neuchâtel, 27.08.2015 (FSO) – In 2014 the Swiss economy registered a growth in grossdomestic product (GDP) of 1.9% at the previous year’s prices (+1.8% in 2013).Taking a slight  decrease in the general price level into account, GDP at current prices grew by 1.2% (2013:+1.7%). Foreign trade strongly contributed to the rise in GDP in 2014 due to sustained growthin exports...

After the strong revaluation of the Swiss franc in recent years, some economists, like the ones at the Swiss National Bank (SNB), claim that the franc is overvalued. Many use misleading Purchasing Power Parity (PPP) measures like the Big Mac index, the OECD index or the PPP based on consumer prices for computing fair values. The second big mistake is to compute the Real Effective Exchange Rate (REER) with the wrong “base year”, i.e. to assume that in 1999 the CHF was correctly valued. The...

John Henry Smith of Grail Securities (Switzerland) specializes in the U.S. stock market and offers a unique and powerful advisory service to private investors, institutional investors, and SME asset managers, who are seeking to consistently beat the market. All our strengths are at your disposal to provide stock market research and recommendations with the only aim of growing wealth. To achieve this we develop with you a customized investment strategy in terms of your risk and return...

Overview: Sight deposits are currently the by far most important means of financing for SNB currency purchases, for interventions. Sight deposits are assets for commercial banks, the Swiss confederation and other counterparties that deposit money at the SNB, but for the SNB they are liabilities, debt.Sight deposits are always denominated in CHF. The SNB finances itself with Swiss Francs. With a rising CHF the debt relative to assets gets bigger, because the assets lose their value. As...

Marc Meyer argues that the Swiss National Bank must build up reserves, but this does not mean “foreign exchange reserves”, but “Swiss Franc reserves”. According to the constitution these reserves are owners’ equity denominated in Swiss Franc and some gold. Thomas Jordan’s famous paper “Does the SNB need equity” tries to overturn the constitution suggesting that the constitution accepts FX investments as “reserves”. Russia builds up foreign reserves with national resources, with equity, the...

After the strong revaluation of the Swiss franc in recent years, some economists, like the ones at the Swiss National Bank (SNB), claim that the franc is overvalued. Many use misleading Purchasing Power Parity (PPP) measures like the Big Mac index, the OECD index or the PPP based on consumer prices for computing fair values. The second big mistake is to compute the Real Effective Exchange Rate (REER) with the wrong “base year”, i.e. to assume that in 1999 the CHF was correctly valued. The...

Acket: “Too much transparency is working against the SNB” Julius Baer Group Chief Economist Janwillem Acket argues today that by publishing weekly sight deposits, the SNB is telling the market too much. A more-mysterious SNB is a fresh option for a central bank that appears out of ideas. He also argues that using a basket of currencies, rather than the euro would allow them more flexibility. He points to Singapore as a successful example. Comment by Adam Button, Forex Live EUR/CHF...

According to the latest news release, the Swiss National Bank expects an annual loss of 23 billion CHF, after reporting a loss of 50 billion at the end of June. Primarily thanks to the stronger dollar, the SNB was able to achieve unrealized gains of 27 billion CHF in the second half. This reduced her annual loss to 23 billion. With its rate hike, Fed is helping the SNB: the dollar has appreciated by 6% since July. Balance Sheet The SNB balance sheet looks as follows. In this post we...