U.S. Stocks at the Swiss National Bank Balloon to Record: Gains, Bought, Sold, and How it Keeps that Racket Going

As long as the SNB can bamboozle global speculators into chasing after the incredibly watered-down tiny Swiss franc, it can continue to print money to buy up global assets at essentially no cost.

By Wolf Richter for WOLF STREET.

The Swiss National Bank – now a fund that prints its own money to buy global assets denominated in foreign currency – doesn’t disclose its detailed holdings. But in the US, it has to disclose on a quarterly basis its holdings of US-traded stocks and American Depositary Receipts (ADRs) of foreign companies, which it did this morning with its Q2 SEC filing.

The SNB has piled up US stocks across the range: On June 30, it held 2,437 stocks, compared to the 3,415 stocks in the Wilshire 5000 Total Market Index. From March 31 through June 30, the total value of its US stock holdings rose by $25.6 billion, or by 25.8%, to a record $118.3 billion; $6.0 billion of those gains came from its top 5 holdings: Apple, Microsoft, Amazon, Alphabet, and Facebook.

By comparison, over the same period, the Wilshire 5000 Total Market Index rose 21.4% and the S&P 500 rose 20.0%. But in addition to the gains in market value, the SNB also bought more shares of most of its biggest holdings.

The SNB Top 40.

Of its total holdings of $118.3 billion at the end of June, $51.9 billion were concentrated on its Top 40 stocks and ADRs.

Apple moved into the top spot, pushing Microsoft down into second place. Amazon remained in third place, Alphabet (class A and C shares combined) in fourth place, and Facebook in fifth place.

These Giant 5 accounted for $22.4 billion, or 19%, of its holdings, up from $16.4 billion (17.4% of its holdings) at the end of the prior quarter.

The SNB whittled down the number of shares of two positions of its Top 40: AT&T and McDonald’s, each by -0.3%. But it added to all its remaining Top 40 positions, including huge piles in three of them (increase in the number of shares):

  • AbbVie: +21.7% (now #29).
  • Alibaba Group ADR: +15.4% (now #12).
  • Tesla: +11.2% (now #34).

The SNB holds nearly 30 ADRs, many of them Chinese companies trading in the US. Alibaba is in the Top 40. The others are not, such as Baidu, Bilibili, Weibo, Huazhu, ZTO Express Cayman, Baozun, etc.

The table below shows the Top 40 holdings on June 30, in order of the dollar value of the positions (million $), the share count, the change in the dollar value of the position (million $), and the percentage change in the share count (if your smartphone clips the six-column table on the right, hold the device in landscape position):

Q2 Q2 Q1 to Q2 Q1 to Q2
SNB Holdings, US Stocks & ADRs Million $ Share ct. change million $
% change share count
1 APPLE 6,332 17,358,099 1,933 0.3%
2 MICROSOFT 5,869 28,840,717 1,390 1.5%
3 AMAZON 4,617 1,673,551 1,428 2.3%
4 ALPHABET  CLASS A+C 3,397 2,399,618 651 1.6%
5 FACEBOOK 2,160 9,514,442 603 1.9%
6 JOHNSON & JOHNSON 1,590 11,304,866 128 1.4%
7 VISA 1,439 7,448,494 249 0.8%
8 PROCTER AND GAMBLE 1,286 10,757,748 107 0.3%
9 UNITEDHEALTH GROUP 1,148 3,890,638 194 1.7%
10 HOME DEPOT 1,117 4,459,764 298 1.7%
11 MASTERCARD 1,092 3,694,552 211 1.3%
12 ALIBABA GROUP HLDG 1,035 4,800,094 226 15.4%
13 VERIZONMUNICATIONS 1,034 18,759,451 55 3.0%
14 INTEL CORP 1,012 16,914,904 98 0.2%
15 AT&T INC 924 30,568,637 30 -0.3%
16 NVIDIA CORPORATION 920 2,420,530 325 7.3%
17 PEPSICO INC 862 6,514,679 83 0.4%
18 ADOBE INC 860 1,975,339 262 5.1%
19 MERCK & CO. INC 833 10,769,157 13 1.0%
20 CISCO SYS INC 815 17,476,145 154 3.9%
21 COCA COLA CO 808 18,089,344 15 0.9%
22 DISNEY WALT CO 796 7,140,371 120 2.1%
23 NETFLIX INC 790 1,735,423 151 2.0%
24 EXXON MOBIL CORP 778 17,386,892 128 1.6%
25 PAYPAL HLDGS INC 768 4,406,965 353 1.8%
26 PFIZER INC 764 23,365,691 12 1.4%
27 WALMART INC 756 6,313,958 45 0.8%
28 COMCAST CORP 721 18,491,973 96 1.8%
29 ABBVIE INC 686 6,985,291 249 21.7%
30 CHEVRON CORP 665 7,458,150 130 0.9%
31 MCDONALDS CORP 661 3,585,582 67 -0.3%
32 ABBOTT LABS 658 7,196,708 98 1.4%
33 LILLY ELI & CO 647 3,940,898 103 0.5%
34 TESLA INC 630 583,353 355 11.2%
35 SALESFORCE 624 3,332,642 159 3.1%
36 ACCENTURE PLC IRELAND 621 2,890,138 153 0.9%
37 THERMO FISHER SCIENTIFIC 572 1,577,260 130 1.3%
38 NEXTERA ENERGY 555 2,311,383 3 0.7%
39 AMGEN INC 550 2,332,618 83 1.1%
40 COSTCO WHSL CORP 547 1,804,518 41 1.7%

Speculators in Swiss francs enable the SNB to run this racket.

All kinds of folks think that buying Swiss francs (CHF) is sort of an insurance policy against devaluation of their own currency. Others buy the CHF for pure speculation. The Swiss economy is tiny, and the Swiss franc is a tiny currency, but there is enormous global demand for the CHF which drives up its value against other currencies, such as the euro, dollar, or yen. Ostensibly, the SNB attempts to cap the exchange rates by creating new CHF and selling them to buy assets denominated in other currencies.

Total assets on the SNB’s balance sheet amounted to CHF 835 billion in June. Switzerland’s nominal GDP was CHF 700 billion in 2019. So the SNB’s total assets amount to 119% of 2019 GDP. How big is this?

The Fed’s gargantuan balance sheet currently measures $6.95 trillion. That’s about 31% of 2019 nominal GDP:

  • The SNB’s assets are proportionately speaking nearly four times the size of the Fed’s assets.
  • If the Fed’s balance sheet were 119% of 2019 nominal GDP, it would amount to $26 trillion instead of $6.95 trillion.

That’s how proportionately huge the SNB’s balance sheet is.

To keep this racket going, the SNB must make the world believe by hook or crook that the CHF can only go up, that the SNB itself is struggling valiantly but vainly to keep a lid on the rise, that it will ultimately lose the battle, and that the CHF will always rise against other currencies. That’s what the SNB must make the world believe in order for this racket to continue.

And this scheme then encourages speculators and others to pile into CHF and actually drive up its value, so that the SNB can then print an unlimited amount of CHF and hand them to those speculators in exchange for assets denominated in other currencies, such as Apple shares.

As long as global speculators believe in this racket, the SNB can keep it going. But if these global investors realize what the SNB is actually doing – namely, printing CHF, thus watering down the CHF – and if they then flee the CHF and sell it, its value would drop sharply against other currencies, and after a while the SNB would be forced to end or even reverse the program to save the currency.

But as long as the SNB can fool global speculators into chasing after that incredibly watered-down tiny currency, thus creating insatiable demand, it can continue to print the currency to buy up assets around the globe at essentially no cost.

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  151 comments for “U.S. Stocks at the Swiss National Bank Balloon to Record: Gains, Bought, Sold, and How it Keeps that Racket Going

  1. Dan says:

    What a scam. Print money, buy assets.

    How do I get in on this?

    • M says:

      The “Federal” Reserve bankster cartel does this every day. I am just glad that the Swiss have gotten into the funny money game too! At least they have not been ripping off Americans for decades, like the parasitic “Federal” Reserve and its parasites/banksters.

      On the other hand, many of the ultra-rich have gotten Swiss citizenship. Thus, this may be getting enabled by them and the “Federal” Reserve bankster cartel to create for themselves a redoubt where they can be safe with their fortunes.

      • Old School says:

        I think the Fed has finally done it: they inflated stocks, bonds, houses, education, health care, unemployment insurance, now gold and soon food and energy. Give them a gold star.

    • andre says:

      Can anyone blame them? If the currency speculators are so silly what should stop them

    • Crush the Peasants! says:

      Start a bank. It’s just not national banks that print money. Wells, BofA, all the banks that make loans do, too.

      • Javert Chip says:

        Crush the Peasants!

        American banks (other than the Fed) making loans (eg: BoA, et al) DO NOT create money. However, this is a very common misunderstanding on the part of people who have no clue how accounting works.

        Just because you don’t understand something, doesn’t necessarily make it wrong. Maybe instead of crushing, you should help educate peasants…starting with people who claim bank lending creates money.

        • cb says:

          @ Wolf:

          Crush the Peasants said: “It’s just not national banks that print money. Wells, BofA, all the banks that make loans do, too.”

          Javert Chip said: “American banks (other than the Fed) making loans (eg: BoA, et al) DO NOT create money.”

          Who is correct?

        • Wolf Richter says:


          No. An individual bank cannot create money. This notion is a total misconception but refuses to die. If a bank could create money, no bank would ever collapse. That’s the difference between a central bank and a regular bank.

          I normally block this stuff. It’s a falsehood that people keep spreading, and I’m tired of seeing this nonsense on my site, and I’m tired of wasting my time arguing with it. But this one slipped through.

          What is true is that the banking system as a whole — including the central banks and all commercial banks combined — through the flow of credit, via varying prices of assets (collateral) that are sold, bought, financed and paid off, via deposits, and via other mechanisms creates and destroys “money” throughout the regular credit cycle.

        • cb says:

          @ Wolf –

          Thanks. This is a baffling topic, because I see so much written on both sides. I was leaning towards Crush’s position. As I remember, Finance 101 taught the money supply was expanded via bank loans through the fractional reserve system.

          Reserves are another area of bafflement. Reserve requirements have been greatly reduced, if not eliminated.
          The FED does pays interest on reserve holdings. The reasons why are varied.
          There are claims that when the FED expands their balance sheet and buys bonds, these purchases are bought from primary dealers simply by expanding the primary dealer excess reserves, where the reserves are “trapped” and therefore make no contribution to inflation. It makes no sense that they are “trapped” from my vantage.

    • HowNow says:

      Thanks, Wolf, for the report on the SNB.
      For everyone: The SEC is now taking “comments” regarding a policy change that they are considering. It will eliminate 90%+ of the 13F reports that publicly traded companies have to report quarterly. This is clearly a lobbying effort from hedge and private equity. Please contact the SEC and voice your opposition to them making this change. Daniel at “Whale Wisdom” (a poster of 13F quarterly reports goes into the why and wherefor and how you can easily contact the SEC to express an opinion. Here’s his website: https://whalewisdomalpha.com/sec-13f-rule-change-would-cut-13f-filers-by-90/

      • Wolf Richter says:

        Nah… Small fry being adjusted for 45 years of inflation. This is what the linked article says:

        “The proposal would raise the AUM threshold that investment managers must meet every quarter from $100 million to $3.5 billion. For the most recent quarter, 5283 firms filed 13Fs. The rule change would have reduced that to 549 firms — almost 90% of filers.

        “The $100 million threshold has not changed since Congress adopted the requirements in 1975. The SEC adopted the rules in 1978.”

        • HowNow says:

          I’m surprised by your response.
          The entire purpose of requiring funds and PE firms to reveal their holdings was to increase confidence and visibility for the true “small fry”, small investors. No, it’s not particularly fair that they have to do it, but the intention was to give this token bit of information to small fry so that more investors would participate. The change will adjust for inflation over 45 years, yes, and will save an infinitesimal amount of money for firms submitting the 13f report, but will effectively eliminate 90% of firms from even reporting this info, which is only given out at the end of a quarter and something like 45 days after that.

    • Anon1970 says:

      You can’t. The Swiss central bankers adopted this policy to keep the Swiss franc from getting too expensive vs. the US dollar. Another expensive war involving the US might just knock the US dollar from its perch as the world’s principal reserve currency. In the days of the old Gold Standard, the British pound was worth about $4.86. Now it is only worth about $1.31 and Britain is a second rate power.

      • Bobby Dents says:

        Britain became a 2nd rate power during gold standard. It doesn’t matter what con money transfer mechanism you have, when the printing stops, the party is over.

    • Trinacria says:

      Modern day version of 1970’s song by Stealers Wheel: “crooks to the left of me, crooks to the right of me, here I am, stuck in the middle with you…”
      Also, you can’t make up the fact that “stealers” is so appropriately part of the name. Maybe the SNB should be the “Stealers National Bank”. We do live in the theater of the absurd.

      • VintageVNvet says:

        Good one T,
        But I think we peasants need to keep always in mind that the entire corporate madness, including from the very first days of ”accrual accounting” when the fantastic fantasies flourishing today began to bud and bloom, to such nonsense as corps being declared people, and now today’s SO obvious criminality and stealing, will, one day, go away.
        Makes one almost hungry for the ”robber barons” of yore, mere stumbling apprentices next to the corporate hoodlums of today, eh?
        ”Clean House, Senate Too.” is going to spread from the so called progressives to become a mantra for the majority,,, and that will also include cleaning out all the Hugely corrupt puppet politicians at every level, sooner and later!

    • Investor X says:

      I’ve been astonished by this for a long time. How can we allow a country to just acquire ownership of our assets free of charge? I mean that’s all it’s really doing. I don’t blame them, they should try and do ten times as much. Then we just hand over ownership of all of America’s productive assets free of charge? The Swiss will never have to work again and can lay around like sheiks on beds of gold eating chocolate. How is this maddness allowed!?!?

  2. Jessy James says:

    As some point, the SNB will be forced to sell, no matter the global perspective of the CHF. Just like all the other sovereigns, the Swiss economy will crash and they will have to bail out their corporates or their unemployed. Look at the DXY and the potential issues as the Fed prints. What will happen to the DXY when ole Sleepy is relaxing in the Oval Office? Ya think TSLA will keep going higher as unemployment hits 30 percent? The SNB is just energizing the lever, for an overload…

    • cb says:

      @ Jessy James –
      What will the SNB be forced to sell?
      Why will they be forced to sell?
      How will this make the Swiss economy crash?

      • happy_man says:

        how don’t know why they would be forced to sell but I am shopping for a swiss watch.

        I am not into jewelry, I don’t want anything flashy. None of that hated gold on my wrist. I don’t care about brands. I’m not paying for a name so no rolex. I want a precision mechanical time piece that is very accurate and will last a long time. Waterproof case. No electronics on it at all. Actually it could be made in Japan or Somalia for all I care as long as the quality is very high. Any recommendations?

    • Cashboy says:

      Jessy James

      The Swiss economy internally might not perform so well in the near future but understand that Switzerland is such a wealthy country because there are so many large multinational corporations (Nestle, Roche, Novartis) based and paying their corporation tax to Switzerland.
      Their subsidiary companies are all over the world therefore have profits from their subsidiaries in different currencies so have some protection/spread.

      The population of Swiss nationals is only 7 million people.

      Lets also not forget that the Bank of International Settlement is in Switzerland.

  3. MonkeyBusiness says:

    That’s why Central Bankers hate Gold. It’s literally the only money that can not be printed.

    • Memento mori says:

      I hate gold too.
      Sending people down mines, to die in some cases, and expending valuable, non-renewable resources, in order to dig up and refine an element, with the main purpose of sticking it back in another hole, and guarding it at great long-term cost, just because we cannot find a basis for trust, is a rather sad indictment on our species, I would say.
      The person who loves gold is rather sad, as the originator of the story of King Midas very long ago recognised. And something similar can be said about bitcoin (which wastes enormous amounts of electricity).

      • max says:

        Fiat money fiat freedom

      • Cas127 says:

        “cannot find a basis for trust”

        Solution: Send the debasing political class down a hole.

      • MonkeyBusiness says:

        A banker with a briefcase can kill more people faster than miners.

        • urblintz says:

          Touché. There is a plethora of useless products which, consumed because people “love” them, which in one way or another leave a trail of blood from production to consumption. One could use the same rhetorical flourish about the fashion industry…

        • Harvey Cotton says:

          Would you rather have colorful bits of paper, or equity positions in some of America’s largest, most profitable firms? Central Banks used to buy inert yellow and silver metals. Now they buy ownership of assets that pay dividends and accrue capital gains. If the currency goes south, Switzerland can always sell stock or buy more Tesla – which only goes up.

          What I do not understand is how Swiss-based multinationals like Nestle tolerate their home Central Bank snatching up ostensible global competitors.

      • chase metz says:

        Well I AM VERY HAPPILY SAD. Trust?? Who?

      • Xabier says:

        I turn gold into lasting beauty, say 5 centuries or so, in the bindings of fine antiquarian books and use a very little on my picture frames.

        All mining is, of course, ethically worrisome.

        Although one might extend that to cover almost every aspect of industrial civilisation, which is now nothing more than a ‘suicide machine’ for our species.

        Every action results in the death or degradation of someone or something else on a vast scale.

      • Trinacria says:

        Well Memento mori, I think the moment of “memento mori” (in latin the moment of death) is upon us for the fiat currencies. Gold is like the old Listerine commercial…I hate it but I use it. News flash; all bankers and politicians mess with the currency (just ask “Arhentina”), so what’s a mother to do??? Gold and silver haven’t been here for thousands of years for nothing!!!

        • VintageVNvet says:

          not exactly,,, more ”reminder” of death,,, and most recently, more like a memorandum or ”notice” of death, as used by one of my fave mentors, who had written his, in Latin, before he died in 2008…
          Besides classical Latin, he was fluent in German, French, Italian, craps, poker, and other current languages,,, allegedly came back from WW2 with $50K in a money belt, from his fluency in the latter two,,,, used the dough for his PhD, as he was completely self supporting (other than scholarships) from age 14.
          I will add that although he tried his best to get a lot of stuff through my thick skull,,, he frequently just shook his head and said, “How soon we grow old, and how late we grow wise.”
          Miss him greatly!!

        • Memento mori says:

          I hate gold for what it represents, not as an investment.
          When army generals of the Roman Empire entered the city as victors parading their spoils of wars, the senate would assign a person to whisper at the generals ear “memento mori” , remember death , as a way to moderate their vanity and power.
          It’s all about self restraint and stoic way of living.
          It’s how our elite has lost its way, lack of self restraint. Memento mori!

      • happy_man says:

        @momento mori if you detest what people on earth do with gold so much you will love it in heaven where they pave the streets with it.

    • rhodium says:

      You can’t print chickens. I’ll give you five for your cow. Or an oz of rhodium. Land!? Land! What has tradable value these days anyway.

      • MonkeyBusiness says:

        You can breed chickens and cows.

        Land is valuable, but it’s not money because it’s not fungible.

    • The assumption may be that the Swiss currency is backed by gold. Just as the US gold reserves are one of the largest, which provides support for the dollar.

      • Ed says:

        I don’t think it has anything to do with gold.

        The Swiss are viewed as a stable country with stable finances and with a long history of sober policy. This looks more and more attractive day by day as the U.S. looks more and more foolish and incompetent.

        People don’t worry that the Swiss may suddenly appear to be the Emperor With No Clothes.

        • SwissCow says:

          Switzerland may look more stable than the US or Europe but it is actually not much better off than the rest. Banks feeding real estate bubbles, unlimited credit by the wealth management for the ultra- rich you name it. But Switzerland has tourism and export oriented industry as well and they lobby for a stable ( by some definition of stable) exchange rate. That request is the official justification for the SNB policy.
          Huge buying power for the Swiss Franc sounds good but it creates big problems on the borders: exports become incredibly expensive, tourists get offended by the price level, immigration pressure rises

    • Bobby Dents says:

      Lol, please. Gold standard was loved by bankers. They printed money all the time and then when any value was drained they would trigger a panic confiscating any assets they could. Commodity money is inflate and confiscate. You saw it quite a bit between 1819-1929.

      They were forced off of it. Digital money ain’t money boy.

  4. nick kelly says:

    Well…not everyone in Switzerland is happy with the high franc, e.g., Swiss manufacturing industry. In my narrow experience of saw blades, I learned a while ago that for cutting metal, a Swiss blade was worth the extra money.

    There has also been a Swiss CB attempt to halt the rise by pegging the franc. This led to a sort of comical scandal in 2012 requiring the head banker Hildebrand to resign. He blabbed to his bed partner that he was thinking of pegging the franc and she went and sold 400K worth for US$, then sold the dollars for a profit. He insisted he didn’t know about this and a lot of people believed him but he resigned saying he couldn’t prove he didn’t know.

    This vast juicy balance sheet is amazing. However I don’t see how the SNB gets in trouble because they do have this immense hoard of now US$ denominated wealth to redeem francs.

    Also couldn’t the same thing be said of the US$? The Fed’s balance sheet is smaller than SNB but how about US controlled assets worldwide that were bought with US$?

    BTW; my actual knowledge/ understanding of this topic is so minimal I didn’t even know the ‘Swissie’ was still a hot number. I only knew it was pegged to gold a while ago and was a ‘safe haven’ then.

    • Wolf Richter says:

      nick kelly,

      What speculators need to do is sell the CHF and walk away from it, and it will come down.

      Instead, they keep falling for the SNB’s game which is now all set up to entice speculators to buy it so that it can SELL newly created CHF to them in exchange for foreign assets, at no cost. It’s an ingenious game. But it has to pretend that the CHF will only rise if it doesn’t do this.

      This scheme enriches Switzerland (75% of the SNB is owned by Swiss public entities, including 55% by the Cantons), and if the CHF goes a little too high, the SNB buys a whole lot more stuff at zero cost. The SNB has every motivation to keep this scheme going forever. That’s what you need to understand.

      • cas127 says:

        Considering that all fiat currencies are subject to abuse, now accelerating, I wonder if there is a good website that provides simple historical FX rates/graphs for many cross-currency and currency-commodity pairs.

      • cb says:

        Speculators are buying the CHF because they would rather have the CHF than the dollar or whatever currency they are buying the CHF with. It’s a game of figuring out which Central Bank and currency is the worse bet. Thank you FED.

        • Ed says:


          The world’s wealthy searching for the least dirty shirt. In some ways, I am surprised gold is only at $2000. There is a lot of fear.

      • Taps Coogan says:

        Crazy as is it, if the SNB needs to reverse course and defend the CHF, they can do so without selling domestic assets and sovereign debt. It will hit US markets first and Swiss markets only on second order effects. If the Fed has to go in reverse… all they have to shed is domestic debt and that is going to hit home immediately.

        • MarMar says:

          Yeah, this looks win-win to me for Switzerland. If CHF does crash, the Swiss National Bank can buy it all back very cheaply using dollar-denominated assets. It looks to me more like SNB is buying a lot of insurance rather than that they are playing a con game.

      • MooMoo7669 says:

        The Swiss (SNB) Move to Equities was shrewd, because they knew we were entering a period of Sovereign debt default (one which Fitch has already, recently, claimed to be ready to it records). To keep their pension scheme ‘somewhat’ solvent, they had to put assets somewhere, and equities were the only place left. Government bonds are too risky and yield nothing.
        But the idea that the SNB actually WANTS a high chf is folly.

        They tried a peg, but it failed, like it always does. They’ve tried negative interest rates (the most negative on earth) and that has also failed. It is not ‘speculators’ buying this currency – it is large institutions parking money in the chi – even at negative rates, because of two main reasons. the first is stable governance and stable property rights. But the main one is completely simple, and is the real reason why Switzerland is wealthy….

        It has no Capital Gains tax.

        …other countries should try it.

        When capital isn’t taxed – it has the ability to accumulate. Especially when the population is educated and productive.

      • bigfan says:

        it looks like a bit oversimplified as an explanation like the whole story actually, an unusual post for your appreciated blog. The swiss economy has a net positive export balance so it is structurally supporting the CHF. it is surely insane that the snb has morphed into one of the biggest hedge fund, because it is a huge risk for this tiny country. If the value of the portfolio is going lower when converted back into CHF then the SNB is writing a loss and cannot pay anything to its shareholders. if there is a risk there could/will be a cost. creating money is also not free, it can go as far as credibility goes, but there is a point where the public loses confidence and by the time you know this point has been reached it is usually too late. Of course it could go on a very long time before things go wrong for the SNB, but they are playing with the fire.

        • Wolf Richter says:

          “…because it is a huge risk for this tiny country. If the value of the portfolio is going lower when converted back into CHF then the SNB is writing a loss and cannot pay anything to its shareholders.”

          No, wait… If there is a loss in the portfolio when sold and converted into CHF, it’s just a paper loss, and the cantons might grumble a little, but it’s not an actual loss because that money to buy these stocks was created out of nothing, and the SNB can create an unlimited amount of money to fund itself and fill any holes that occur. A central bank that creates its own money can never collapse, and the concept of an actual “loss” does not apply.

          The risk of this activity is on the currency… that speculators lose confidence and that its purchasing power gets eaten up by asset-price inflation and consumer-price inflation.

        • MooMoo7669 says:

          re: below…

          “A central bank that creates its own money can never collapse, and the concept of an actual “loss” does not apply.”

          …Venezuela on line 1 for you.

        • Wolf Richter says:

          The central bank hasn’t collapsed. The currency has collapsed due to inflation. And that’s what I said in the my comment above (last paragraph).

        • bigfan says:

          “…The currency has collapsed due to inflation…” in the case of Venezuela, the currency first has collapsed because of economic and monetary mismanagement and as a result not a cause inflation rose for imported goods and loss of confidence in the local currency.

          “No, wait… If there is a loss in the portfolio when sold and converted into CHF, it’s just a paper loss”
          the SNB is rewarding its shareholders only when they show profits on their balance sheet not when they show up with losses. Admittedly as a central bank the SNB could keep on running loss and reach negativ equity while staying alive as it is creating CHF but you can only double down on your loss as long as there is confidence in your currency as mentioned in my comment.

      • Joese says:

        Multinationals yes, but they are actually all original Swiss companies. 100 years old. And that buying up started with Germany’s and the USs bank crisis.

  5. MCH says:


    I was obviously thinking too small yesterday with Wolf Street bonds… but never fear, I am happy to correct my own thought process.

    You should start your own country, ok, it’s actually a two step process, start with the Wolf Street bond, then when you collected enough cash, buy gold with it, not too much, just enough with some of the funds from your bond program, and start up your own country and print your own currency. Peg it to your gold reserve, think painted bars of stuff with the correct density. Call your country Wolf Nation, and then copy of SNB charade somehow and invest in real estate and stocks. On your gains, you then buy more gold, the real stuff, and eventually you can reset the peg to something like the dollar and cash in.

    Unlike the Kingold guys, you can’t be prosecuted for fake gold backing your currency, you are after all the el presidents dictator for life.

    I know this is demented, but what the heck. YOLO. May as well enjoy it.

    • Inno says:

      Start a church instead…

      • MCH says:

        Church of Wolf… then all ad proceeds can be considered tax exempt under whatever religious statute they have.

        I think that’s also a great idea. ?

    • Cas127 says:

      “Call your country Wolf Nation…”

      Or you can just look into buying bitcoin, or any other true currency that is anchored to something/anything other than the integrity of a nation’s political class.

      • MCH says:

        Nah, bitcoin can be outlawed by a country, one country can’t outlaw another Country. They can only bomb them, sanction them, and apply diplomatic pressure.

        • Cas127 says:

          But if a country can outlaw holding gold, it can also outlaw holding another country’s currency.

          And a crooked G would do so for the same reason – because it cannot survive any competition to its centrally rigged currency – which it prints at will in order to exercise ultimate economic control.

  6. max says:

    Gary North Honest Money:
    Three counterfeiters are discovered. The first one is a middle-class man who owns a cheap offset printing press. He has printed 500 $20 bills and spent them into circulation.
    The second one is a U.S. government official. He works for the Bureau of Engraving and Printing. He has printed up a million $20 bills, and the government has spent them into circulation.
    The third is the Chairman of the Board of a multi- billion-dollar New York bank. His bank has loaned a billion dollars of fractionally reserve bank money to Mexico’s government-owned petroleum company, Pemex. The price of oil has collapsed, so Pemex can’t pay its bills.
    What happens to the three counterfeiters? The first man is convicted of counterfeiting and is sent to jail. The second man works until age 65 and is given a pension.
    But what about the third man, the chairman? Here is where it could get interesting. The third man goes to the nation’s central bank, the Federal Reserve System, which in turn calls the Mexican government, which immediately prints a Mexican bond for $25 million, which is then bought by the Federal Reserve System with electronic money created out of nothing. This Mexican bond then becomes part of the “legal reserve” which supposedly undergirds the U.S. monetary system. (This was made legal in the infamous Monetary Control Act of 1980, against which only 13 congressmen voted.)
    The Mexican government sends the money to Pemex, which then remits $25 million to pay this quarter’s interest payment to the New York bank. Three months from now, another $25 million will fall due. The chairman of the New York bank gets a round of applause from the bank’s board of directors, and perhaps even a $100,000 bonus for his brilliant delaying of the bank’s crisis for another three months.

  7. D J Thomas says:

    Central banks have become the socialist benefactor to the rich

    • historicus says:

      Central banking is Socialism
      The unelected making economic decisions behind closed doors the effects of which they are immune due to inflation adjusted pensions

      • Bobby Dents says:

        Nope, it isn’t why would socialists need a central bank when Treasury fills that role??? Shows how ignorant you are. Central banks are like the bourgeoisie state to banks.

  8. Memento mori says:

    I think your analysis is a little simplistic.
    The Swiss , especially the bankers, aren’t stupid and those investors who pile into CHF have done their due diligence and are more sophisticated than we might think.
    The western world is changing , we are ignoring our basic laws that made us what we are, worse we are improvising new laws and giving tremendous power to technocrats, totally destroying honest money in the process.
    It’s an understatement to say that CB have crossed all rubicons.
    Smart people are looking at how this might play out.
    Swiss central bankers have been at this for some time and from their actions, it seems that the best store of value for the foreseeable future is the stock market, mainly big productive companies.
    They are buying productive capacity with freshly printed fiat.
    It’s better than gold. And not a stupid idea if you really think about it.

    • Wolf Richter says:

      Memento mori,

      I didn’t say it was “stupid.” I called it “ingenious” just a minute ago. From the Swiss point of view, it’s a great scheme — and I pointed out why: buying global assets “at zero cost”. But I’m not Swiss. I’m American. And for me on the other side of it, it’s a “racket.”

      • MCH says:

        What does it take to get Swiss citizenship?

        • p coyle says:

          if you have to ask, you probably can’t afford it.

        • SwissBrit says:

          Long term residency of 10 years or more currently gives you the option to become Swiss, assuming that you can prove that you can aptly speak a national language (there are 4, and English isn’t one of them), have sufficient social and cultural ties to the country and area you live in, and have no Swiss legal issues: speeding tickets can count you out, believe it or not.
          Costs have gone down considerably in the last few years; now it’s a fixed cost, but prevously it was a fairly hefty percentage of your annual wage, which put a lot of people off claiming it.
          Swiss residency is considerably more simple to achieve, and requires either a job in Switzerland or large amounts of money.

        • SwissCow says:

          If you are a mere mortal: Get a well paid job in Switzerland , move there, stay for 10 years in the same city, learn German or French, don’t get caught speeding or using the wrong trash bags. Finally do an interview , pay about 1k. Easy.
          There might be shortcuts if you bring 50M +.

      • cb says:

        Yes Wolf,
        But it is our FED that is an accomplice to the racket.
        The FED/Bankers so debase the dollar that the wall street/financial types are able to undertake all kinds of speculations and machinations. The public is “trapped” in a yield seeking world, where easy money provides a continuous chase leading to mal-investments. The SNB seems to have figured a way to steal legally; doing so, they are no doubt the envy of the FED/Bankers/Wall Street types.

      • Lisa_Hooker says:

        Speaking of ingenious, what if the US were to buy lots of Chinese products and send the Chinese US dollars in payment, then offer to take back the US dollars in exchange for promises to send even more US dollars in the future (as promises don’t cost much right now). I know, sounds crazy. Probably wouldn’t work.

    • andy says:

      Prices of assets truly are irrelevant when money is free

  9. Beardawg says:

    Is CHF a Swiss Franc ??

  10. andy says:

    On our scale of printing we could buy entire Switzerland. And after Blackrock fees still have money left for Luxemburg.

    • noname says:

      “Genealogy database Ancestry.com is selling 75% of itself to Blackstone Group for $4.7billion in deal that will give the asset manager access to DNA data of up to 18 MILLION members”

      in the news today

      • HowNow says:

        “Invisible hands” doing God’s work. Capitalism… it ain’t for the faint of heart.

      • noname says:

        Oh brother, I apparently had a Flintstonian slip before bed last night; I woke up twice wondering about this……. lol

    • cb says:

      It seems that it is our scale of printing that is allowing Switzerland to buy us.

  11. Beardawg says:

    Sounds like if the everyday American Joe keeps buying the FANG/MAGA, the stocks will quadruple or better with SNB continually buying due to the CHF currency devaluation….AND…..because purchases are denominated in USD, we can’t lose. Cool.

    • cb says:

      Unfortunately, American Joe (the average American) is losing every day because the average American is outside the benefit of the FED’s money creation. Certain groups are benefiting at the expense of others. The SNB is just one of the inside group that recognizes how to benefit from the FED’s larcenous money creation.

      • Ed says:

        The Fed engages in “trickle down economics”. Asset holders are the beneficiaries.

        I am surprised that there is no political party that would assail this method of bailing out the country, which has been going on now for two decades or a little more, if you want to date it from the “Greenspan Put”.

        • Ed says:

          Maybe I should say that it’s telling that no political party has railed about this systematic financial policy.

          I probably should not be surprised, though I am, occasionally, when I think about it.

  12. MonkeyBusiness says:

    If only we can buy SNB’s stock and participate on this rocket ride.

    • Wolf Richter says:

      You can buy the shares (25% are publicly traded) but stockholders don’t benefit from any of this. It all goes to the Cantons.

      That’s the ticker: SNBN.SW

  13. Wes says:

    Excellent analysis Mr. Richter.

  14. raxadian says:

    Wolf, just change a few words and you would be basically talking about the USA dollar.

    • Wisdom Seeker says:

      Or the Chinese Yuan… Or Japanese Yen….

      What’s special about the Swiss is that there are only 8 million people – less than Michigan, or Ohio – in a country that’s about 1/3 the size of either state. They’ve done some “special” stuff but moreso cultivated the mystique of being “special” and now have a brand identity stronger than anyone. So even though they had to peg their currency to the Euro to avoid an economic implosion, everyone still wants the CHF or “Swiss bonds” as a “safe haven”.

      But you know, if you get a reputation for having a very well-run economy (despite an absolutely horrendous COVID response), so that everyone overvalues your currency, maybe you’ve earned the privilege of buying up the world?

      And if you think about it, maybe owning top-quality corporate stocks worldwide is a better deal than the ECBs thing of printing money to buy/bury zero-yielding (yet risky!) corporate and sovereign bonds?

      • cb says:

        I don’t think the Swiss currency is pegged to the Euro.

        • Wisdom Seeker says:

          It’s not a rigid peg but the rate is managed. Switzerland is landlocked and the surrounding Eurozone is largest trading partner. During the 2011 Euro debt crisis the Swiss Franc was shooting the moon as the Euro tanked, forcing up prices of Swiss goods sold in Euros. The Swiss businesses couldn’t export anything anymore, and they had to do something.

  15. The Swiss aren’t running massive deficits? Loading up your balance sheet on NYSE stocks provided an embarrassment of riches. Which major bank runs their stock buying program? I’ll bet they made a few front running these guys.

  16. TownNorth says:

    Interesting. No US bank stocks in the top 40.

    • HowNow says:

      Conflict of interest or maybe they know something about the solvency of U S banks.

      • Warren Buffet just made BofA his second largest holding. I consider that a cynical investment on the first order. Do you want profits or a lifetime get out of jail card from the US Fed?

  17. bungee says:

    another reason people might believe that the franc only goes up is because of the bait and switch the snb played a few years ago. (if memory serves me) the franc was once pegged to the euro. when the ecb began to solve problems with printing, the swiss were poised to follow them down that road. the snb made a friday announcement reaffirming their commitment to the peg. then on monday abandoned the peg. thats called lying. i think that had a deep impact on people and let them know that the swiss would always try and have a hard(er) currency.
    what i want to know is why do they buy u.s. equities? do they trade in and out?

    as for the gold chatter further up.. gold does have a use; storing value. we’re probably not going to need to mine much more of it, since all of it is still above ground.. like, hundreds of thousands of tons. as for trust and our species &c.. greed is a real thing. fraud is too. so are lying cheating and stealing. they are just a few of the many many risks we encounter with our investments. our savings for a rainy day should be with as few risks as possible- physical gold. and oh yeah, gold is going to the moon.

    • Xabier says:

      Lying, cheating and stealing are, after all, not moral defects, as Nature knows no morality, and they are evolved strategies that can pay off very well in terms of group and individual survival. Man is not the only deceiver.

      ‘Hi, unknown tribesman, I’m friendly, I’m not going to stab you with this big spear. Oops, I did! Well, I got to live and stab another day, and you are dinner tonight, or your head is a pleasant and fashionable ornament for my house.’

      One of the richest and most psychopathic people I know mixes a little honesty and good faith in with his general scum-iness – a wonderful smoke screen, and one laughs to hear people say he is ‘quite decent and not ALL bad. ‘

      • cb says:

        Xabier said: “Lying, cheating and stealing are, after all, not moral defects, as Nature knows no morality,”

        Morality is a human construct (or some would argue a devinely inspired set of rules).

        A wolf among sheep has an advantage. If lying, cheating and stealing are not punished, they grow. Hence the growth of the FED/Banking/Wall Street/Lobbying/Politics and financial engineering.

      • Dog says:

        Morality, religion and cooperation certainly had a competitive advantage. Otherwise they wouldn’t exist. Nature (evolution) selected for them, and it’s worked well enough so far not to completely collapse/ go extinct.

  18. TonTon says:

    Over 1000 Tonnes of Gold for less than 9 Million people. Not a bad position for a country to be in whatever happens in the world.

    • Putin on the Ritz says:

      And private sector debt of 250% of GDP.

    • Lisa_Hooker says:

      That’s 1040 tonnes of Swiss reserves gold. The Swiss citizens privately hold another 980 tonnes gold.

  19. historicus says:

    SNB and other central banking connected entities are the ultimate insider traders
    and not a word of complaint

  20. Phillip says:

    Could another small country have emulated the Swiss? The secret is to get the world to initially believe in the soundness of your currency, then once that is established, you can seemingly ride that reputation for all its worth in the next generation or two. Was it in the seventies, after Nixon took the US dollar off the gold standard, that the CHF got it reputation for stability?

    A confidence scam can only work if the perpetrators display an aura of legitimacy. We do have a lot to fear if the fiat (I.e. confidence) system really unravels. Those who wish for $10,000.00 per ounce gold do not know what a force ten hurricane that implies.

    • Just Some Random Guy says:

      Luxembourg is like Switzerland, but keeps a very low profile and adopted the Euro. Lux has a higher per capita median income than Switzerland. It is crazy rich. Driving around W. Europe, when you see a $150K+ car on the freeway, there’s a pretty good chance it has a LUX license plate, even though the population of the country is only about 500K.

    • MonkeyBusiness says:

      10K? LOL

      Won’t be that low when the Dollar really drops.

      Also why do people think Nasdaq 100K is better than 10K. The former means : super high wealth inequality and Big Tech controlling every aspect of life. I suppose stockholders won’t mind, but everyone else will … in the end.

  21. Old School says:

    Ten year sales growth around 4%, stock market growth 14%. That extra 10% per year is air the fed has pumped in. Can’t last unless they go Weimar.

    • cb says:

      In a debt based system with inflation built in, a small increase in income allows a large increase in debt service. Hence higher dollar income supports a disproportionately higher house price via debt; this is exaggerated by lower interest rates. This results in spiraling asset prices.

      It is a great way to create debt slaves. This has been done.

      “Neither a borrower nor lender be,” Perhaps there really is evil in it.

  22. SwissBrit says:


    Small typo; “The table blow shows the Top 40 holdings”

  23. Engin-ear says:

    It occurs to me that Swiss GDP ($0.5T) is roughly equal to FAANG’s yearly revenues, same order of magnitude.

    And there are some similarities in investors’ interest.

  24. Johnny be good says:

    As for my understanding, the swiss franc is appreciating against USD and EURO… and always was…
    The dollar lost half it´s value against the CHF over the last 20 years.
    With all the money printing by all the CBs, there is no way this « appreciation » of the CHF could be reversed.
    SNB will devalue the CHF in order to be able to compete with the EURO. This trend will increase tremendously in the next few months, the balance sheet of SNB will keep increasing strongly as a result.
    Dollar lost 10% against the CHF over the last few months, this is huge. SNB will buy more and more of FAANG…
    Playing this game can be quiet profitable for the small investor, as you can buy equity of the SNB. Went roughly from a thousand a share to 5000 a share over the last 4 years, and this in an appreciating currency…

    • Wolf Richter says:

      The SNB is the biggest money-printer of them all. Relatively speaking, nearly four times bigger than the Fed. That’s the “racket.” The CHF is gaining because speculators are chasing after it. If they walk away, it’ll drop like a rock.

      • Citizen AllenM says:

        Well, I disagree.

        If it starts dropping, they will let it fall for a hot minute or two, until competitive status is once again afforded to their Mittelstand, and they will then act to *stabilize* it. Of course, they will front run their stock sales with put purchases just to catch it all coming and going….

        The ability to financially manage such large portfolios allows a lot of firepower to be summoned at a moment’s notice.

        In short, I respect their ability to be nimble more than most.

        And they have played their abundance of liquidity left over from the euro crisis with panache. Now it will be fun to watch all the forward gold deliveries ending up in Swiss warehouses….

      • nick kelly says:

        I’m a bit confused. Their franc is overvalued like an overvalued stock, but they make apparently good acquisitions with it.

        I get that they print more than the Fed, but does the Fed have as many comparable assets, or is the Fed’s printing just social net and bailouts?

        Is it correct to think of the SNB as a mutual fund and the franc as its shares and if so, is the Swiss franc sort of backed by these FAANG etc. shares?

  25. Michael Engel says:

    1) QQQ may be peaking this week.
    2) QQQ, SPY, IWM… are below RSI line from Mar 23 2020(L) to June 26(C) (on linear charts) on lower volume.
    3) The cloud (18,52, 104) : the front end is the widest ever. B of the
    cloud, underneath price, is a flatbed.
    4) QQQ x2 bearish divergence : July 10 & 20 ; July 20 & yesterday ==>
    price is higher, but RSI is lower.
    5) Test the same RSI line on the NDX winners.

  26. historicus says:

    It’s almost as if there was a cocktail party in Davos
    and all central bankers agreed to drop interest rates, to the benefit of their empowering governments, to zero.
    And prior to rate cutting, equity investments would be made a policy, maybe even a new mandate….why not? They self author their powers and mandates just like an EPA or other govt agency does.
    The markets have become “arrangements” that are “supervised” by central bankers…ala Socialism..
    and here we thought Communists were the threat

    • Bobby Dents says:

      Again boy…….that’s socialism???? I mean, are you mentally ill. If capitalism had anything going on, this scheme would be toast. 2000 was such a turning point. Capitalism is the debt ponzi. Been that way since 1000.

  27. coboarts says:

    Since the Swiss are used to getting through catastrophes, and plan to get through the current one coming out well, would I be wrong to go to my retirement account and go long the top Swiss 40?

    • The Swiss were able to remain neutral in W2, probably because they were hiding stolen property from Nazi Germany. They repatriated Jews, and turned them away at the border. For decades they were the place you could park dubious assets in a secret Swiss bank account. They did not so much repent, they were replaced with a host of global tax shelters. They have effectively run corporations through China whose value depends primarily on the currency. They are a currency manipulating nation with a corporate image problem. Then we can discuss their racial diversity. ” Harry Lime: In Italy for thirty years under the Borgias, they had warfare, terror, murder, bloodshed. They produced Michaelangelo, da Vinci, and the Renaissance. In Switzerland, they had brotherly love, five hundred years of democracy and peace, and what did they produce? The cuckoo clock.”

      • Cashboy says:


        The cuckoo clock was actually German even though the Americans always used to buy a cuckoo clock in Switzerland believing it was invented there.

        • Oh Holly, what fools we are, talking to each other this way. As though I would do anything to you, or you to me. You’re just mixed up about things in general. Nobody thinks in terms of human beings. Governments don’t. Why should we? They talk about the people and the proletariat, I talk about the suckers and the mugs – it’s the same thing. They have their five-year plans, so have I.

    • Cashboy says:

      The Swiss never have catastrophes.

      Switzerland has always made money from wars and from misfortunes of other countries whether it is storing money, gold and assets during war or being the place where negotiations are held after war or in the course of preventing war.

      Switzerland invented mercenaries.

    • Anthony A. says:

      @cobarts: “would I be wrong to go to my retirement account and go long the top Swiss 40?”

      Think about this….where else is there to put it? Maybe gold?

  28. P Rao says:

    But this is exactly what the US$/Fed/USA has been doing with the US% being the world’s reserve currency. The world buys USD, Fed prints more of it to keep it from rising, Americans enjoy the new prints at zero cost.

    If now the US$ holders didn’t believe the strength of their own currency and went hunting for their reserve currency then the CHF is the gold.

    The swiss say ‘we no wars, we hard work, we no inflate, we make knives, we are chf’, and it sounds golden versus all other states that either run wars or work normal or make some rusted knives.

    The swiss intelligently knew to place themselves as the golden republic/currency on the planet, based on which all investor nations will place their savings in chf.

  29. Cashboy says:

    I have always wondered why Switzerland has not printed the money and bought physical gold.

    And why don’t central banks print money and purchase gold.
    Then announce a gold standard?

    • Bobby Dents says:

      The run on debt would be brutal

      • Social Nationalist says:

        Capitalist system that doesn’t grow, doesn’t live. Doesn’t matter what kind of monetary system exists.

    • erich says:

      switching to gold standard supported the great depression due to limited growth rates. Whether you like it or not: FIAT money is more flexible and made the last decades growth possible. Of course, it came only with leverage, but that’s not the case with the Swiss Government (Private Sector is another story).

    • Paul Feuermann says:

      Even worse, the SNB sold 1000 tons of gold in the early part of the new century at an average price of US$ 400. And to build their current portfolio of Euro bonds and US$ stocks they took a loan of SFr. 600 billion and all in all they amassed huge currency losses. Think of it: since end June and now the SFr. may have risen more than 5% and their US$ stocks have lost that part of the equation. With the Euro we came from 1.7 in 2009. Where are we now? 1.08. It is all total madness. Nobody can really make the price in the currency markets over the medium term (i.e. 1 week) and most obviously the SNB. For that markets are just too large (US$ 7 trillion per day)…. We are living with the consequences of the debt supercycle and in that we may approach the final sequence…. Paul, CCS

  30. Social Nationalist says:

    A gold backed currency isn’t abused???? Libertarianism…..You guys. All systems based on usury is manipulated.

    Look, Swiss basically games the reserve currency for themselves. Nobody gives a sheet. When the dollar falls, it won’t be pretty for anybody, including them.

  31. “…..But as long as the SNB can fool global speculators”…..

    Good Article Wolf.

    But the SNB is NOT Fooling anyone.

    Speculators are using the SNB to serve their own ends, as is the “Fundamental” nature of Speculation, that is to say, take advantage of Opportunity as it presents itself in Markets.

    In the end when the chickens come home to roost, and they will, with the Consequences being served to the Swiss People, the “Fools” will not be the Speculators.

    They will have already moved on to the next Opportunity or “Folly” as it may be.

  32. Raymond Rogers says:

    What I don’t understand Wolf is why you have shorted this beast? You are on the up and up with this stuff, tracking global liquidity as well. I’m just curious as to your thought process given that the market snapped back like a rubber band in March.

    I’m a bear. That is why I’ve been all in since the dip.

  33. Petter Wildhagen says:

    Thanks for posting this.
    Keith Weiner of monetary-metals.com said he believes the swiss franc will collapse

  34. JM says:

    My dear Wolf, I have always appreciated your articles but this time you put your finger in the eye, let’s be serious, maybe you have forgotten that the USA prints the dollar from nothing and that all other countries must accept this diktat, I assume that Switzerland have of excellent bankers send the scam back to the sender.
    I challenge you to prove otherwise.

    • Wolf Richter says:

      I’m discussing the Fed separately, as you can tell from my Fed articles. This article was about the SNB, not the Fed. I did say that the SNB is proportionately 4 times bigger as a money printer than the Fed.

      But let’s clarify a HUGE difference here: The SNB is buying foreign currency asset, such as US stocks and there is no price to be paid by Switzerland as long as speculators are eagerly taking the CHF. The Fed doesn’t buy foreign currency assets.

      • P Rao says:

        The Fed has bought (off) *all* and *of* the _nations_ that use USD as trading/reserve currency. There couldn’t be a greater foreign asset than that!

  35. Paul Feuermann says:

    I am not sure about your conclusion on the value of the Swiss Franc, dear Wolf (I enjoy your comments a lot). Why is the Swiss Franc rising once the SNB liquidates its portfolio in foreign currencies? The SNB loaned the currency into existence and has a corresponding bank debt (with the local banking system) of plus SFr. 600 bio. Once they sell the assets, i.e. the US$ they must go and buy SFr. to repay the money owed to the banks (sell US$ buy SFr.). Which would do if anything rather strengthen the exchange value of the SFr. It all boils down a reckless racket as you correctly say. What if valuation in the US stock market collapses (I high likelihood)? Will the SNB or rather can the SNB just sit idle and watch how its debt stays the same and the value of its assets melt down like the snow in the June sun?
    Already they may have posted an additional huge loss as the SFr. may have gone from 0.95 (end of June) to 0.91 (currently) against the US currency and that may not be the end of the journey even if we may experience a short covering rally in the coming stock market crash). The situation with their Euro portfolio is exactly the same. And clearly there are similar valuation concerns and ….. default risks. Not in the immediate future but long term. Most European countries stopped serving their external debt during the thirties as the decenny wore off. And then the war made any such debt totally worthless, as it were. And mind you, of the SFr. 39 billion book profits (against the same amount of losses in the first quarter) SFr. 4 billion stemmed from negative interest (0.75% p.a.) of those banks that gave the money to the SNB in the first place!!! The lender is forced to pay interest to the borrower: what a travesty!
    The handwriting of casino capitalism in the hand of money cartels is written large and wide over these last days of human civilization whose money is destroying all life on the Blue Planet…. Paul, Caracas

    • cb says:

      Paul Feuermann said: “The SNB loaned the currency into existence and has a corresponding bank debt”

      Can we be certain of this? How so?

      • Paul Feuermann says:

        A glance onto the balance sheet of the SNB would do the trick!!!!
        The SNB is an unregulated hedge fund at this stage. If we continue with SFr. 40 bio loss alternating with SFr. 40 profits I wish to think that the SNB needs to be regulated more tightly and periodically… This is Parliament that is being called upon. But negative interests are quite obviously a blessing and makes governing a country soooooohhhh much easier. Switzerland has negative interest rates on all debt inclusive of Cantons and local govt. … and by the way Novartis, Nestlé, etc. (ECB owns a good chunk of their debt). This is unsustainable to say the least…
        Paul, CCS

  36. Lou Mannheim says:

    Elon Musk is personally keeping the CHF bid. :)

    Seriously, what about inflows for numbered accounts? That’s still a thing I believe, despite FBAR reporting requirements.

  37. ewmayer says:

    And this scheme then encourages speculators and others to pile into CHF and actually drive up its value, so that the SNB can then print an unlimited amount of CHF and hand them to those speculators in exchange for assets denominated in other currencies, such as Apple shares.

    As long as global speculators believe in this racket, the SNB can keep it going. But if these global investors realize what the SNB is actually doing – namely, printing CHF, thus watering down the CHF – and if they then flee the CHF and sell it, its value would drop sharply against other currencies, and after a while the SNB would be forced to end or even reverse the program to save the currency.

    But this strikes me as the ingenious part of the scheme – the SNB sold its CHF high to buy non-CHF-denominated shares in actual corporations (we can debate whether it bought the latter high, given that its fellow CBs are pulling out all the stops to keep shares inflated) – so say the global speculator class does sour on the CHF and the latter’s value plunges. What then? Well, sure, imports are gonna get pricy in terms of CHF, but the SNB has those huge amounts of $-denominated assets it can sell to help with that. The speculators are left to try to get some other sucker to take their no-longer-wanted CHFs off their hands, and when the shakeout has run its course, SNB steps in, sells some relatively-much-smaller portion of its stock holdings to hoover up the excess CHFs it printed to buy those shares, and is left with the difference, pure profit. The main danger to me would seem to be a simultaneous global share-market and CHF crash, but that seems unlikely based on cleaner-of-these-reputational-currency-shirts grounds.

    Am I missing something in my take here?

    • Paul Feuermann says:

      Swissy is NOT going to crash. Not unsimilar to Japan Switzerland is by definition a deflationary set up which means that as the global economy collapses salaries, retail prices, property markets etc will all go down in value and this will push the SFr higher not lower. Unemployment on the other hand will go ballistic!!!!

  38. SwissKid says:

    @Wolf: congratulations on the excellent analysis. I am Swiss and very concerned. Actually, the CHF has become a basket of EUR, USD and some other currencies. We also have the world’s highest negative key interest rate: -0.75%. The US is currently threatening the SNB to classify it as a currency manipulator. The SNB cannot reduce its foreign currency assets holdings either, because it will then drive prices down and make the CHF even stronger. In my opinion, the SNB is completely unable to act.

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