Jordan Rebuffs Idea of SNB Sovereign Wealth Fund Yet Again

  • Central bank’s FX reserves are worth more than $700 billion
  • SNB has repeatedly faced calls to spin off assets for fund

SNB's Jordan on Franc, Foreign-Reserve Intervention

The Swiss National Bank’s vast heap of foreign-exchange reserves shouldn’t be used for a sovereign wealth fund, President Thomas Jordan said.

With more than 690 billion francs ($708 billion) accumulated due to interventions to weaken its currency, politicians and members of the public have repeatedly urged Switzerland’s central bank to use the money for a fund in the manner of Norway or Singapore. Officials at the central bank regularly counter that proposal.

“We are decisively against the SNB’s currency reserves being used in a sovereign wealth fund,” Jordan said at a press conference in Bern on Thursday. “Our foreign-exchange reserves aren’t just banknotes that we put under the mattress. We have a sophisticated, well-developed investment policy.”

The SNB has argued that Norway isn’t an apt comparison because its income stems from oil and taxes, whereas in Switzerland’s case the assets don’t represent a profit and their transfer would lower the central bank’s equity. Moreover, the SNB has to be able to draw down the currency reserves to shift its stance if needed, and a fund would hamper rather than help policy making.

From time to time, the central bank comes into the cross hairs of political campaigners. Currently, both environmentalists and an anti-military group are looking to tighten the restrictions on the companies the SNB invests in, and a national plebiscite on Vollgeld -- which would effectively end fractional reserve banking -- is also pending.

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