The Swiss National Bank (SNB) performs the functions of the central bank of Sweden. Unlike most central banks, the SNB is not a state institution, although the influence of the State on its politics is great. According to the results of the referendum, held in 1906, it was organized as a joint-stock company and in the same year a corresponding law was adopted. The SNB started its activity in 1907. The Bank works in closely cooperation and under the general guidance of the Government of Swiss Confederation. As any joint-stock company, the Bank issues the listed stock. The capital stock of the Swiss Banks is about 50 mln. Swiss francs. Only the citizens of Switzerland, Swiss companies and the companies, having headquarters in Switzerland can hold the stocks.
Goals and responsibilities
Price stability is an important condition for growth and prosperity. Inflation and deflation worsens the economic situation. They complicate the process of decision-making by consumers and producers, which leads to misallocation of labor power and capital as a result of redistribution of income and assets, and put the economically weak at a disadvantage. The SNB equates price stability to consumer price at the level of not less than 2 % per annum. Deflation - i.e. protracted period of decline in the price level - is deemed to be a violation of the goal of price stability. Medium-term forecast of inflation is the main index for monetary policy.
The SNB implements its monetary policy by adjusting the liquidity in the money market and, consequently, affecting the level of interest rates.
To implement monetary policy SNB uses different tools.
1. Target range of interest rates
The SNB implements monetary policy by setting a target range for its three-month rate (Swiss LIBOR rate). This range usually has a spread of 100 b.p. and is reviewed at least once a quarter. This rate is used as a target rate as it is the most important money market rate for investments in Swiss francs. Changes in this rate are accompanied by a clear explanation concerning the changes of economic conditions.
2. Open market operations
Repo transactions are among the main instruments of the SNB monetary policy. They represent sale of the securities by the payee (the borrower) to the cash provider (lender) with a simultaneous agreement to buy back the securities of the same type and in the same quantity on a later date. This structure is similar to a secured loan, where the payee must pay an interest to the cash provider. Repo transactions usually have very short maturities - from one day to several weeks. The SNB uses such repo transactions to counteract the undesirable movements of the three-month’s LIBOR rate. To avoid exceeding of the set level by the three-month’s LIBOR rate, the Bank provides additional liquidity to commercial banks by means of repo transactions at lower rates and, as a matter of fact, creates additional liquidity. On the contrary, increasing the repo rates, the SNB can reduce liquidity or initiate a three-month’s growth of the LIBOR rate.
The SNB publishes "Quarterly Bulletin", a detailed assessment of current state of the economy and the review of monetary policy. "Monthly Bulletin" is also published. It contains an overview of economic development. These reports can provide information about changes in the assessment by SNB of the current situation in the country.
In addition to the usual instruments, the SNB has a number of other tools, including currency swaps and forward transactions, purchase or sale of securities in Swiss francs. The SNB can also buy or sell derivatives on receivables, securities, precious metals and currency pairs.
The SNB has the privilege of money emission. In addition, it provides the economy with banknotes, meeting high standards of quality and safety. Also, its duties include the distribution of coins.
The SNB provides the services of payments between the banks in the field of non-cash payments. All of them are made in the interbank payments system through the deposit accounts at the SNB.
The SNB manages the foreign currency reserves, being the most important component of its assets. The bank needs foreign currency reserves to have room for maneuver in monetary policy at any time. Currently, the level of foreign currency reserves is dictated directly by implementation of monetary policy or compliance with minimum interest rate.
The SNB contributes to the stability of the financial system. It fulfills this obligation by analyzing the sources of risk for the financial system and identifying the areas where actions are required. In addition, it helps to create and implement a regulatory basis for the financial sector, and performs control over systemically important payment systems and securities settlements.
Together with the federal authorities, the SNB participates in the international monetary and financial cooperation and provides technical assistance.
The SNB acts as banker to the Confederation. It processes payments on behalf of the Confederation, issues debt securities, bears responsibility for safekeeping of securities and controls the money market and foreign exchange transactions.
The SNB collects statistical information on banks and financial markets, balance of payments, direct investments, international investment positions and the Swiss financial reports.
Organizational structure and management
The General Meeting of Shareholders is held once a year, usually in April. Owing to the SNB public mandat, the powers of the General Meeting of Shareholders are not as wide as those in joint stock companies within the frames of the private law.
The Bank Council oversees and controls the conduct of business by the SNB. It consists of 11 members: six members, including the Chairman and Vice-Chairman, appointed by the Federal Council, and five members at the meeting.
Jean Studer is the President of the Bank Council (initial elections were held in 2007, the current election 2012) , Steymer Olivier is the Vice-Chairman (initial elections were held in 2009 , current election 2012).
Apart of the Chairman and Vice-Chairman, the Banking Council consists of nine other members. The full composition of the Banking Board is available on the official SNB website.
The bank's highest governing executive body is the Board of Governors. Among other things, it is responsible for monetary policy, management of investment strategy assets and international monetary cooperation.
The Board consists of three members:
- Thomas Jordan, Chairman of the Board, Zurich;
- Fritz Zurbrugg, Vice-Chairman;
- Andrea Maechler, member of the Board, Zurich.
They are responsible for the strategic and operational management of the SNB. The members of the Governing Board and their alternates are appointed for six years by the Federation Council by the recommendation of the Board of the Bank with the possibility of reelection.
Each member of the Board manages one of the three departments of the bank:
Department I consists of seven divisions:
- Economic Department
- Department of international monetary cooperation
- Department of legal and property issues
- General secretariat
- Department of internal auditors
- Department of compliance
- Stabilization fund
Department II consists of three departments:
- Finances and risks department
- Financial stability department
- Monetary regulation department
Department III consists of three departments:
- Financial markets department
- Bank operations department
- Information technologies department
- March 14
- June 20
- September 19
- December 12
- March 20
- June 29 (with press conference)
- September 18
- December 11 (with press conference)
- March 19
- June 18 (with press conference)
- September 17
- December 10 (with press conference)
- March 17
- June 16 (with press conference)
- September 15
- December 15 (with press conference)
- March 16
- June 15
- September 14
- December 14
- March 15
- June 21
- September 20
- December 13