If you thought you were having a bad day or you think that the Bank of England is having a rough time controlling its self what would you say if you lost $142.60 billion?
Swiss National Bank made losses of 142.2 billion
The Swiss National Bank lost 142.2 billion Swiss francs ($142.60 billion) in the first nine months of 2022, as rising interest rates and the stronger Swiss franc slashed the value of the central bank’s foreign investments.
The loss – the largest in the SNB’s 115-year history – was slightly more than the annual economic output of Morocco ($132 billion), but the central bank does not face bankruptcy thanks to its ability to create money.
The SNB made a loss of 141 billion francs from its foreign-currency positions as the bonds and stocks bought during its campaign to stem the appreciation of the safe-haven franc slid in value.
The figure included exchange rate-related losses of 24.4 billion as the stronger franc further reduced the value of its holdings, which include stakes in coffee retailer Starbucks and Google owner Alphabet. Gold holdings lost 1.1 billion francs in value.
“These losses may sound like a lot, but the SNB is not a normal company,” said UBS economist Alessandro Bee.
“The problem is the stagflationary environment where equities lose, bonds lose, gold loses and the Swiss franc becomes stronger. Normally bonds and gold gain when equities lose. But that’s not happened in 2022.”
“Normal bankruptcy rules” do not apply, he added, noting that the SNB, which made a 41.4 billion franc profit a year earlier, would always be liquid as long as there is demand for Swiss francs.
The loss could, however, mean that the central bank halts payouts to the Swiss federal and cantonal governments next year.
Continued massive losses could wipe out the SNB’s equity, which stood at 204 billion francs at the end of 2021.
The SNB, which has recently started hiking interest rates to combat inflation, declined to comment on the loss or what it would mean for a payout or its more restrictive monetary policy.
Still, Vice Chairman Martin Schlegel indicated a slide into negative equity would not alter the central bank’s approach. He also expected a positive long-term return on the bank’s investments.
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