by Since 2008 the balance sheet of the Swiss National Bank has risen from 28% to 102% of Swiss GDP. Balance sheets of other central banks have strongly risen, too. But there is one big difference: The risk for the SNB is far higher, the SNB nearly exclusively possesses assets denominated in volatile foreign currency. SNB balance sheet now over 100% of GDP It should be remarked that the SNB assets are volatile FX investments. FX investments are less than 3% of the BoJ, ECB, Fed and BoE balance sheet. Central banks from Emerging Markets typically buy foreign bonds. But these countries have far higher inflation and therefore – over time – a weaker local currency. But the Swiss Franc is a currency that by tendency appreciates. SNB runs a massive currency risk SNB: From 40% in 2012 to 102% of GDP. Nearly all volatile assets in foreign currency. Bank of Japan: Still increasing asset purchases. Only 2% of assets in foreign currency. The Japanese private sector owns foreign currency bonds, but not the central bank. ECB: Since Mid 2014, rising asset purchases. Has few foreign assets. Fed: Stopped asset purchases in 2015. Bank of England: % of GDP remained flat since 2013. The BoE no assets in foreign currency. People’s Bank of China Stopped strong asset purchases in 2011.
Topics:
George Dorgan considers the following as important: Bank of Japan, foreign currency, interventions, line in sand, SNB, SNB balance sheet, SNB, George Dorgan's opinion, Swiss National Bank, Switzerland foreign assets, Switzerland Money Supply
This could be interesting, too:
George Dorgan writes SNB reports a profit of CHF 5.1 billion for the first half of 2018
Swiss National Bank writes Swiss National Bank commits to FX Global Code and supports establishment of foreign exchange committee
Ronan Manly writes Sovereign Money Referendum: A Swiss Awakening to Fractional-Reserve Banking?
Marc Meyer writes Nach Vollgeld-Schlacht: Wir Schweizer dürfen nie mehr zum Spielball ausländischer Ideologen werden
Since 2008 the balance sheet of the Swiss National Bank has risen from 28% to 102% of Swiss GDP. Balance sheets of other central banks have strongly risen, too. But there is one big difference: The risk for the SNB is far higher, the SNB nearly exclusively possesses assets denominated in volatile foreign currency.
SNB balance sheet now over 100% of GDPIt should be remarked that the SNB assets are volatile FX investments. FX investments are less than 3% of the BoJ, ECB, Fed and BoE balance sheet. Central banks from Emerging Markets typically buy foreign bonds. But these countries have far higher inflation and therefore – over time – a weaker local currency. But the Swiss Franc is a currency that by tendency appreciates. |
 |
SNB runs a massive currency riskSNB: From 40% in 2012 to 102% of GDP. Nearly all volatile assets in foreign currency. Bank of Japan: Still increasing asset purchases. Only 2% of assets in foreign currency. The Japanese private sector owns foreign currency bonds, but not the central bank. ECB: Since Mid 2014, rising asset purchases. Has few foreign assets. Fed: Stopped asset purchases in 2015. Bank of England: % of GDP remained flat since 2013. The BoE no assets in foreign currency. People’s Bank of China Stopped strong asset purchases in 2011. Has a high currency risk because the assets are mostly in US Dollar and some Euro. However China is a country in development, with typically higher inflation rates. This reduces the currency risk. |
Central Bank Balance Sheet as percentage GDP
(see more posts on SNB balance sheet, on Central Bank Balance Sheets)
|
Total Assets of Major Central BanksThe Fed, ECB, BoJ and BoE bought assets in their own currency, while the PBoC bought mostly dollars in order to prevent a stronger appreciation of the yuan. |
 |
The SNB buy foreign assets
|
SNB vs. BoJ Balance Sheet
|
