A loss of CHF131 billion is anticipated from foreign currency transactions, and another CHF1 billion is anticipated from positions held in Swiss francs.
The bank is expected to lose 132 billion Swiss francs ($143 billion) in 2022, which is its largest loss since 1907 and approximately 18 percent of GDP. Meanwhile, the National Bank valued its gold holdings at a modest CHF400 million gain.
It has been alleged that because it is a large institution, it controls the strength of the franc to support Switzerland’s export-oriented economy. However, a series of interest rate hikes intended to control imported inflation contributed to Switzerland’s franc’s appreciation last year.
Interestingly, pressure is now on other central banks. The US Federal Reserve Bank reported $330 billion in unrealized losses in the first quarter of 2022. According to Modulus CEO Richard Gardner, “the Federal followed that up with a statement in the summer saying that it expected to run at a loss for several years, booking between $60 billion and 180 billion in deferred assets, which is basically an IOU to the government.” Alternatively, a loss.
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However, due to fundamental differences in policy and position between the Swiss National Bank and the US Federal Reserve, normalizing the bank’s losses is difficult. According to reports, the issue in the United States is that it paid out more interest than it earned, and in Switzerland, the majority of losses were caused by forex positions.
Meanwhile, the central banks of Australia, Belgium, Canada, England, and Japan, among others, are sitting on losses. Additionally, the European Central Bank is announcing losses.
