Swiss National Bank Admits It Spent $470 Billion On Currency Manipulation Since 2010

Tyler Durden's picture

By now it is common knowledge that when it comes to massive, taxpayer-backed hedge funds, few are quite as big as the Swiss National Bank, whose roughly $100 billion in equity holdings have been extensively profiled on these pages, including its woefully investments in Valeant and the spike in its buying of AAPL stock at its all time high.

But while the SNB's stock holdings are updated every quarter courtesy of its informative SEC-filed 13F (we wish the Fed would also disclose the equities it holds courtesy of its Citadel proxy), getting a gllimpse of the flow is more problematic, and involves waiting for the hedge fund's, pardon central bank's annual report.

Earlier today patience was rewarded when the SNB filed its 108th annual report, in which it disclosed that it spent CHF 86.1 billion or $88 billion, on current interventions last year, a measure of its efforts to shield the economy from deflation.

As Bloomberg reports, SNB President Thomas Jordan and his colleagues have repeatedly pledged to step in to prevent the franc from strengthening. They’ve done so even since they gave up a minimum exchange rate of 1.20 per euro in January 2015 on the grounds the interventions required to sustain it were out of proportion to the economic benefit. 

This is how the SNB explained its intervention:

In order to fulfil its monetary policy mandate, the SNB may purchase and sell foreign currency against Swiss francs on the financial markets. Foreign exchange transactions can be conducted with a wide range of domestic and foreign counterparties. The SNB accepts well over 100 banks from around the world as counterparties. With this network of contacts, it covers the relevant interbank foreign exchange market. The Singapore branch office facilitates round-the-clock foreign exchange market operations, if necessary.  

 

In 2015, the SNB purchased a total of CHF 86.1 billion of foreign currency, with the vast majority of foreign currency purchases being made in January. During the remainder of the year, the SNB also remained active in the foreign exchange market in order to influence exchange rate developments, where necessary.

This announcement was an odd departure from SNB protocol: Swiss policy makers rarely state outright that they’ve intervened, and analysts use data on sight deposits and foreign currency reserves to gauge the scope of the central bank’s actions. Breaking with the usual protocol, Jordan said in June the SNB had acted to stabilize the franc amid the Greek debt crisis.

The 2015 figure compares with 25.8 billion francs spent on interventions in 2014 and 188 billion francs in 2012. The SNB made no foreign-currency purchases in 2013.

In other words, as shown in the chart below, the SNB has spent a total of $471 billion to intervene in currency markets since 2010, amounting to two thirds of the country's GDP, and in the end failed after the drain simply became too big.

And yet somehow "analysts" think that where Switzerland failed, China will be able successful in maintaining its closed capital account.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ParkAveFlasher's picture

SNB should have had a V8!

illyia's picture

Excuse me, Flasher, for butting in, butt...

 

Tylers - Please do USA next! Please, please, please!

JRobby's picture

SWN admits that it did the bidding of it's EU overlords for 5 years and finally said fuck you! It costs too much. Ahhh those thrifty Swiss!

MalteseFalcon's picture

The Swiss people need to "have a dialog" with the SNB.

try_it's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

Ghordius's picture

only that there is no such thing as "currency manipulation" anymore. then if the US Treasury would continue to embark on this specific crusade, it would have to accuse the PBoC, first

which is, for all purposes, the biggest and most important... Primary Dealer. and the biggest FED partner in the new reverse repo "business"

excursion in memory lane: Timmah in front of laughing Chinese students

Wild Theories's picture

everyone is a currency manipulator now

before "global recession" becomes official, there won't be a major currency left that isn't manipulated by their CBs anymore

 

fx will go where Central Banks want them to go, if they have the firepower

if not, then they'll go where other Central Banks want them to go ;)

JRobby's picture

"everyone is a currency manipulator now"

Hence the term: "Currency Wars"

Oldwood's picture

The only way they would "spend" that kind of money is if it were not their own.

LawsofPhysics's picture

That's a whole lot of paper/digit pushing...

Yes, it would appear that the mis-allocation and mal-investment of capital and resources is continuing at warp speed... 

 

so what?  This is not news to anyone...

Cognitive Dissonance's picture

Chump change. Try harder, print more.

Nothing says insanity quite like doing more of what failed in the past.

knukles's picture

Einstein is oft quoted as defining insanity as doing the same thing over and over again while expecting a different outcome.
Which is actually an indica or behavioral trait of insanity
Sanity is properly defined as clarity of thought.
So, what do we have here?  Spending Bazillions on currency manipulation (Looks like there's no currency war to me, ma!) and being one of the biggest holders of iApple or soiling one's pants?

Ghordius's picture

not everybody is engaged this way in currency war. specifically, there is one currency that does not... buy or sell dollars against it's own currency. reverse repos

SoilMyselfRotten's picture

Nothing says insanity quite like doing more of what failed in the past.

 

One cannot rule out retardation

knukles's picture

I handn't thought of that.  Altho a few weeks ago in the grocery store I muttered a curse for some reason or another and a lady admonished me.  To which I replied with my best imitation of a speech impediment "If snot nife ooh mak funob da handicapt".

Kina's picture

Money well spent of course, because now everything is back to normal for them. They saved the day with that 470bn

Kina's picture

They may as well bought 470bn in gold... using USD.

They dump the frank in exchange for gold.

At least they would have something to show for it now.

kenny500c's picture

Why buy gold, which pays no interest, when they can buy securities that pay (negative) interest? LOL

Ghordius's picture

because if you buy gold in vast quantities, it's better to keep your mouth shut about it? there is a "price" for everything, and sometimes it's not in currency

Pumpkin's picture

The good news it that it wasn't their money.

JPMorgan's picture

Does that account for how much they blew maintaining their Euro peg.

Infield_Fly's picture
Infield_Fly (not verified) Mar 24, 2016 7:25 AM

Value added gewbermunt!!!

Paul Kersey's picture

Since December of 2008, the USG and the Federal Reserve have robbed US depositers of between $7 trillion and $8 trillion in interest, in order to manipulate the dollar and to turn the criminal kingpins of an international  banking cabel into a multi-generationally wealthy force that now rules the western world.  The Swiss National Bank ain't got nothing on the USG and the Fed.

LawsofPhysics's picture

You are correct.  No worries as eventually all of this capital and resource mis-allocation and mal-investment will catch up with the world.

This time is different in so much as this time it is going to be global Weimar.

Lady Jessica's picture

Did they get value for money?

EddieLomax's picture

Switzerland are lucky to have so many wise central bankers who clearly know better than the market what the correct value of the Franc should be.

And the rabid left will no doubt be pointing to said central bankers and calling them "right wing" when their actions, summed up as "government knows best" is the very definition of socialism.

JailBanksters's picture

Makes you think how much the Wall St Banks spent on Currency Manipulation. My calculator doesn't have that many digits.

forrestdweller's picture

That is around 58000 dollar for each swiss citizen. Would there have been a crisis if this money had been given tot the swiss citizen themselves?

Kaervek's picture

You don't seem to understand. The purpose of the central banks is not to enrich the citizens of their respective countries, but rather to siphon their wealth away without them realizing - all while talking about economic stability and the deflation boogeyman.

riot-police's picture

It takes alot of money printing to have enough ammunition for your money manipulating guns.

venturen's picture

so that is 5 months of ECB manipulation, and probably about 1/50th of the China....and 1/1000 of the USA

Quebecguy's picture

Funny how hard it is to find such an INSPIRATIONAL speech that's only a few hours old. REALLY? Class act.

 

I mean, Class Act: https://www.youtube.com/watch?v=TdzTJKPviWk

 

Incredible, truly. 

overmedicatedundersexed's picture

it's not hard to get rich when you know before it happens that snb will step in the money markets..see making money is easy - but you must be in  the club, and well most all of us are not, maybe the gordius crew, but no they are just paid to pour oil on the waters.

Quebecguy's picture

As an aside, my former address is: 77 North State Street, Concord, NH 033012. That means I'm spitting distance from the capitol of the first democratic state in the Western Hemispere. People usually think thast MY opinion matters, a little bit. 

Quebecguy's picture

Wow. Lots of down votes. Interesting. What was really interesting was seeing that article State Street ("The One Bank"), which my uncle used to be the president of. Thanks, Z.H. 

 

Anyway, the 0.01% (that means I have my father's first and last name, my mother's maiden name is my middle name, and a number at the end to keep track of us, so you'll know in case you meet one someday) is gonna go some food now. Hopefully headed back to CONCORD (home) soon, on a road dad built (only metric signs in the U.S.) to see how things are progressing at the Barley House, with a stop in Burlington along the way. Do you know who Columbo is? Tah Tah Establishment.

F.U. 

(oops) FUCK YOU.