Chart Of The Day: How The Swiss National Bank Went "All In", Three Times And Counting

Tyler Durden's picture


Think the Fed (with its balance sheet amounting to over 20% of US GDP), or the ECB (at 30% of GDP) is bad? Then take a look at the balance sheet of the Swiss National Bank, whose assets now amount to some 75% of Swiss GDP and which has now "literally bet the bank" in the words of the WSJ not once, not twice, but three times in a bid to keep the Swiss Franc - that default flight to safety haven - low, and engaging in what is semi-stealth currency warfare by buying other sovereigns' currencies for over two years now, although he hardly expect the US Treasury to even consider it for inclusion on its list of currency manipulators - after all, "everyone is doing it".

More from the WSJ:

The nation's central bank is printing and selling as many Swiss francs as needed to keep its currency from climbing against the euro, wagering an amount approaching Switzerland's total national output, and, in the process, turning from button-down conservative to the globe's biggest risk-taker.


Switzerland's virtue is the root of its problem: broad confidence in the Swiss currency and economy has investors hungry for francs to escape euros, the currency of its shaky European neighbors. Such demand makes francs more expensive and, in turn, drives up the price of Swiss exports.


In the past three years, the Swiss National Bank SNBN.EB -0.20% has printed francs to buy euros and other currencies in a swelling portfolio of foreign assets four times what it was at the beginning of 2010.


Nearly every major central bank is buying nontraditional assets to resurrect domestic economies in the wake of the worst global recession in 75 years. The U.S. Federal Reserve is buying mortgages; the European Central Bank is making unusually long loans to banks; and the Bank of Japan is buying real-estate investment funds.


All risk losing money, but Switzerland's exposure stands out in character and scale: Its central bank is buying assets from other countries and its holdings of currencies, bonds, stocks and gold—nearly 500 billion Swiss francs, about $541 billion—are nearly the size of the nation's gross domestic product. In contrast, the Fed's buying of bonds and mortgages amounts to about 20% of U.S. national output, and the European Central Bank's holdings stand at 30% of total GDP.


In September 2011, the SNB set a goal of keeping its currency from rising beyond 1.20 francs to the euro, a threshold that SNB Chairman Thomas Jordan has said the bank would fight to maintain "with the utmost determination."




Given its golden reputation, the franc became a magnet for investors fleeing the beleaguered euro, pushing the currency to levels that threatened to cripple Switzerland's export-driven economy.


Although Switzerland is best known for chocolates, watches, banking and Alpine resorts, midsize specialized companies form the backbone of a manufacturing industry that accounts for one-fifth of Swiss GDP. Exports produce half the GDP, with the euro zone by far its largest customer.

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Wed, 01/09/2013 - 09:18 | 3135873 GetZeeGold
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Although Switzerland is best known for chocolates, watches, banking and Alpine resorts, midsize specialized companies form the backbone of a manufacturing industry that accounts for one-fifth of Swiss GDP.../


No wonder they all have guns.

Wed, 01/09/2013 - 09:23 | 3135898 economics9698
economics9698's picture

That's pretty fucked up, I would be pissed if I were a Swiss citizen.

Wed, 01/09/2013 - 09:29 | 3135922 swissaustrian
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We are that's why we've launched a popular initiative to amend our constitution to require the SNB to hold at least 20% of it's assets in physical gold which has to be stored inside the country:


Wed, 01/09/2013 - 09:42 | 3135962 MillionDollarBonus_
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Guys, I've been making some serious money selling EUR-CHF puts below 1.20, knowing full well that the SNB is watching my back. Zhers have turned their noses up at this oportunity, just like they  snobishly rejected HARP, low interest-mortgages and high-yielding peripheral debt. I am shocked that the Zerohedge community rejects clear money-making oportunities provided to them by our global leaders and central bankers, simply because of a childish hatred for leadership and smart economic planning.

Wed, 01/09/2013 - 09:54 | 3135991 Bicycle Repairman
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Wed, 01/09/2013 - 10:31 | 3136121 Buckaroo Banzai
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Race to the bottom? It's ON, bitchez!

Wed, 01/09/2013 - 12:16 | 3136666 MillionDollarBoner_
MillionDollarBoner_'s picture

If its ON, the Swiss should WIN.

They are Kings of the Downhill...

Wed, 01/09/2013 - 13:00 | 3136845 Carl Spackler
Carl Spackler's picture

Thank you!   I needed a good laugh today.

Wed, 01/09/2013 - 10:16 | 3136063 tabasco71
tabasco71's picture

I'm not childish, I just don't have enough spare cash or understand the dynamics of the 'market' well enough yet.

I have benefited from the clear ramping in equities that occurs for a few months following each QE and also made some returns from paper gold, although missed selling the peaks each time.

And I did try to get some Greek paper middle of last year, but actually couldn't find anyone selling it to a single retail buyer in a structure that made the risk worthwhile... from memory the return worked out around 12% which at that time just didn't feel like enough.

I agree, the global leaders are providing some pretty obvious opportunities.

The trick is timing my cashflow to match their opportunities.  They unfortunately seem to have the knack of gifting these chances when I don't have 2 cents to rub together... which means the real money continues to get harvested by those that have real money already :-(

Wed, 01/09/2013 - 11:13 | 3136364 EmmittFitzhume
EmmittFitzhume's picture

On a long enough timeline...your serious money will become serious fireplace kindling

Wed, 01/09/2013 - 11:14 | 3136370 SoundMoney45
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Front running central banks is always easy money, and with inside information and enough leverage, virtually infinite money with zero risk.  Are you willing to share your trades in real time?

Wed, 01/09/2013 - 13:37 | 3137000 ilion
ilion's picture

Which broker have you used to short the EUR-CHF puts? Not many brokers allow naked short-selling. Thanks.

Wed, 01/09/2013 - 09:29 | 3135924 AccreditedEYE
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Where ever you're a citizen you should be pissed... because it's coming to all countries. This is the model. BTFD

Wed, 01/09/2013 - 09:31 | 3135931 Ghordius
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OT: Switzerland has also something very, very important: the draft

in fact, citizens are drafted, trained for a dozen weeks and given their assault rifles by the government for home keeping, because everyone is in the militia, subject to several calls for two or three weeks of military training until they have grey hairs

and so they do have what could be called a different approach to the philosophical principles that the US 2nd amendment tries to uphold

Wed, 01/09/2013 - 09:36 | 3135947 swissaustrian
swissaustrian's picture

Well, you can buy a waiver from the draft, but it's generallly correct.

It's not like military service is dangerous over here, because we haven't fought a war since Napoleon invaded us. There's basicly no risk of getting killed during military service.

Wed, 01/09/2013 - 09:39 | 3135954 GetZeeGold
GetZeeGold's picture



Yeah....but it's gotta be kinda risky having that assault weapon in the house.....right?

Wed, 01/09/2013 - 10:25 | 3136082 arvesia
arvesia's picture

wrong. 2 killed in my platoon.

Wed, 01/09/2013 - 12:37 | 3136755 asteroids
asteroids's picture

The Swiss are generally nice folk and smart too. I think they should embark on something useful like a cure for cancer.

Wed, 01/09/2013 - 10:38 | 3136146 Buckaroo Banzai
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"...and so they do have what could be called a different approach to the philosophical principles that the US 2nd amendment tries to uphold."

Not really. Technically, everyone in the US is also in the militia. Adult men fall into three categories: you are either in the Regular Army, the Organized Militia (aka National Guard), or the Unorganized Militia (everyone else). The Founding Fathers said as much, and this concept was also enshrined into law in the early 20th century (The Efficiency of Militia Bill, aka The Dick Act)

Wed, 01/09/2013 - 10:37 | 3136157 Tao 4 the Show
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I hear from Swiss friends that periodic "crazy-guy" shootings in Switzerland are leading to discussion about gun control. Even some former military guys are in favor of limiting guns to the police and military.

Wed, 01/09/2013 - 10:40 | 3136175 Buckaroo Banzai
Buckaroo Banzai's picture

Where, exactly, do those "crazy guys" come from, I wonder?

Two countries on planet earth present the greatest threat to the New World Order: The United States of America, and Switzerland.

There are dark forces working overtime to destabilize and disarm these last two remaining bastions of independence and freedom in the world.

Wed, 01/09/2013 - 10:55 | 3136231 Tao 4 the Show
Tao 4 the Show's picture

Did you ever imagine 15 years ago that you would someday think these thoughts?

The news on the ground in CH is pretty disheartening. Like elsewhere in Europe, there is a big influx of foreigners with very different value structures. Price inflation is already tough for everyone except the very rich. Even with the 1.2 EUR peg, companies are struggling badly and employees are stressed with longer hours and related problems. Certainly better than most of the rest of Europe, but definitely fraying around the edges.

Wed, 01/09/2013 - 13:45 | 3137029 pirea
pirea's picture

plus a few others they do not have pupet NWO leaders yet, Syria, Iran, Nort Korea, but we are working to fix this. 

Wed, 01/09/2013 - 16:53 | 3138124 TPTB_r_TBTF
TPTB_r_TBTF's picture

Why not have all those unemployed kids do the fixing of that?

Wed, 01/09/2013 - 09:37 | 3135950 Ghordius
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to the point: Switzerland wants to keep it's economic ties to the eurozone. lots of interconnected industry and trade.

no other way. period

the logic of currency wars - the same reasons why the old european currencies would be all dollarized, without the EUR

btw, the SNB is controlled by the Swiss State Banks, who are controlled by the Swiss States (Cantons), who are controlled by their citizens

the FED is a bad copy of the SNB

Wed, 01/09/2013 - 10:19 | 3136070 swissaustrian
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49% of SNB shares are publicly traded, but have no voting rights. I'm a shareholder.

The Swiss state banks (Kantonalbanken) are not shareholders of the other 51%, the states are themselves.

Thu, 01/10/2013 - 06:54 | 3140087 AvoidingTaxation
AvoidingTaxation's picture

Me too.... we could meet at the general assembly and discuss NV Gold too...

Wed, 01/09/2013 - 09:59 | 3136013 Glitterbug
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Somebody please look over the hill; what happens when the US$ reaches its intrinsic value? What is that?

In 2008 there were $800 Billion US$. Today there are $3.4 Trillion and growing by $85 Billion a month.

Exports are not closing the gap, house prices down, stocks down, in fact the size and value of the American Pie that the US$ is based on (each dollar is a claim on a slice of the pie) has got smaller with the growing number of dollars printed.

If the number of dollars increases by 5 times, then the value of each dollar is reduced by the same amount.  

Therefore, the intrinsic value of the $US is 80% below where it is now.

When it reaches that value, what happens to the reserves of countries that hold US$ denominated paper?

Brazil is close to 98% paper, China is over 90% US Paper, Switzerland has 10% Gold and 45% Euros, but remember, the Euro is supported (not backed) by a holding of 65% of its foreign currency reserves (by value) in Gold.

At that point in time, countries will be under pressure to issue new non-fiat currencies to stop or prevent a total collapse.

The Euro has Gold, most of the European countries have enough Gold to issue a 15% Gold backed currency.

Think along these lines and you begin to worry.  

Who does not have Gold (or claims to have Gold that is leased out).

If the fiat currencies collapse and countries go to collect their Gold from foreign stores in the US, UK and Switzerland, what do you imagine will happen?

The US and UK have very little Gold after the foreign ownership is discounted.

They will not allow themselves to be stripped of the Gold.

Corzine was a test of the system, he has got away Scott free using the (bought and paid for) judicial system that kow-tows to Obama and his powerful cronies.

Some kind of law, along the lines of rehypothecation will be invoked and the Gold will stay where it is.  The US and UK will print a new currency with this Gold as backing and nobody will be able to touch them.

War will follow, if not physical, then financial, as the rest of the world wakes up to the fraud and corruption and He Who Has the Gold Makes the Rules.

Wed, 01/09/2013 - 22:37 | 3139432 Matt
Matt's picture

When you talk about intrinsic value of a dollar, what are you comparing it to? Keep in mind all other currencies have been debasing to keep up, so the dollar will not suddenly plunge compared to other currencies.

Gold was in the 400s in 2005 and rose steadily from there; We are not that far from having a 5X increase in gold price in line with the 5X increase in USD supply.

Wed, 01/09/2013 - 10:04 | 3136030 JPM Hater001
JPM Hater001's picture

"No wonder they all have guns."

That and the collective brow wipe after WW2.

Wed, 01/09/2013 - 09:23 | 3135896 AUD
AUD's picture


Wed, 01/09/2013 - 09:25 | 3135903 booboo
booboo's picture

Don't forget the formidable Swiss Army Knife with all of it's utility. I clipped my fungus riddled toenails with mine this morning and clipped my nose hairs right afterwards. Picked the bacon out of my teeth with the trusty "tooth pick" attachment and will pull this damn growth that has formed in my nose in the last several hours with the handy "tweezer" attachment.

Wed, 01/09/2013 - 11:22 | 3136415 Cookie
Cookie's picture

The one I use was bought nearly 30 years ago and is still going strong, without having a service

Wed, 01/09/2013 - 09:26 | 3135907 Catullus
Catullus's picture

But there is no bank run in Europe!

Unless there's some panic out of francs, the people buying franc are eventually going to win this.

Wed, 01/09/2013 - 09:30 | 3135908 swissaustrian
swissaustrian's picture

You should add a chart of XAU/CHF and compare it to the fx reserves spikes.

Gold IS money!

Wed, 01/09/2013 - 09:33 | 3135936 fonzannoon
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Go get em swissaustrian!

Wed, 01/09/2013 - 09:27 | 3135913 AccreditedEYE
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Every time in the past when I've seen these charts and am blown away at CB commitment to their cause, I used to think "it can't keep going.. it HAS to stop". I've learned my lesson. Buying the dip is way easier and WAY less stressful. This chart PROVES it CAN keep going.

Wed, 01/09/2013 - 09:28 | 3135918 Irelevant
Irelevant's picture

This is actually irrelevant, as we are talking about paper vs paper, that can be settled in paper. It can go to 1000% of GDP and it would be the same. The CHF is a debt based currency, so they need to print print print :), not a good idea to get left behind when everybody is debasing the currency. With the new print all the fuck money you can Japanese program you can bet this chart is going up. Exponentially!

Wed, 01/09/2013 - 09:33 | 3135935 swissaustrian
swissaustrian's picture

Switzerland is not Japan.We're not funding our own debt with this money printing, we're funding other countries by buying their bonds with the newly printed money. Our own government debt is just 40% of GDP and we're running budget surpluses.

Wed, 01/09/2013 - 09:56 | 3136005 adr
adr's picture

Yes but if you funded your own debt, you could have your purchasing power decrease by 100% in four years, while having stocks jump 100% as well.

Don't you Swiss want to be paper rich? It's all the rage. My god think how rich you'll be when toilet paper costs 1 trillion francs. You'd have a fortune in the quadrillions at that point.

Man, those guys in Zimbabwe had it made. These guys in America want to be trillionaires. The bar needs to be set higher than that. Zimbabwe already had trillionares.

Wed, 01/09/2013 - 22:44 | 3139445 Matt
Matt's picture

Hungary had 100 quintillion Pengo bills, so there were, presumably, Sextillionaires. Thats 10^21 or 1,000,000,000,000,000,000,000.

Thu, 01/10/2013 - 06:59 | 3140089 AvoidingTaxation
AvoidingTaxation's picture

I have seen a calculation that the EUR that the swiss buyed this year (2012) represent 40% of the new EUR denominated debt of the EURozone.

Switzerland is funding the EU and preventing his implosion, but distorting the market because the swiss buy only DE, NL, FR, FIN, EUR debt.

Thu, 01/10/2013 - 07:10 | 3140094 Ghordius
Ghordius's picture

that is now old, now they are selling some of them to rebalance - and in that they are buying UK "gilts", for example

Wed, 01/09/2013 - 10:46 | 3136211 Tao 4 the Show
Tao 4 the Show's picture

Not sure this is irrelevant.SNB is printing CHF (increasing supply) to meet a high demand level. Supply is increasing, which for currencies usually results in price inflation if that currency chases actual goods. At the moment, the demand for CHF is by people seeking to preserve their wealth so the money stays out of circulation. The SNB is sucking EUR and other currencies out of the system (helping slow Eurozone price inflation) and not suffering much consequence because the newly printed CHF's are mostly staying out of circulation.

Someday, people holding those CHF's will want to trade them in for goods. At that point, something bad happens. Whatever they convert them into will increase in nominal price. Interesting to ponder. Bruce Krasting writes about this topic periodically. A good topic for next time might be speculation about the net outcome. So far, BK and others have been wrong about how long this could go on.

Wed, 01/09/2013 - 09:35 | 3135943 Dr. Engali
Dr. Engali's picture

I'm beginning to hink that it just doesn't matter how big they blow up the balance sheets.If the fed can go to 75% of GDP or higher then that is a lot of bond buying power.

Wed, 01/09/2013 - 09:38 | 3135952 GrinandBearit
GrinandBearit's picture

Short term = Noise. 

Long term =  Global banking system collapse.  

Wed, 01/09/2013 - 09:39 | 3135953 youngman
youngman's picture

I think they will go to us it will not matter....but other countries will make changes...and adapt...

Wed, 01/09/2013 - 09:43 | 3135964 judejin
judejin's picture

this won't end well.

China's M2 have been doubling every 4 years since it joined the WTO. it looks just like the SNB.

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