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.
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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
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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. |
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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)
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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. |
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The SNB buy foreign assets
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SNB vs. BoJ Balance Sheet
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