The profits and reserves of the Swiss National Bank (SNB) have been increasingly at the centre of public attention in recent weeks and months. This must be seen against the background of the National Bank's favourable financial situation, on the one hand, and the financial constraints at the level of the Confederation and the cantons, on the other hand. Aside from the expediency from a fiscal point of view, the questions raised touch on the core of the National Bank's mandate. This is the conduct of a monetary policy that serves the interests of the country as a whole.

Currency reserves may be used by a central bank for interventions in the foreign exchange market. They serve to ward off speculative attacks with inflationary effects. Currency reserves, however, also form part of the national assets. They help to establish a country's reputation as economically sound. They are of great value in emergencies. Moreover, the central bank must have a sufficiently large portfolio of securities eligible for repo transactions or other securities eligible for open-market transactions permitting it to siphon off liquidity in order to ensure price stability.

It is impossible to establish a scientifically accurate optimum level of currency reserves due to the associated uncertainties. The draft of the new National Bank Law contains two main provisions that ensure an optimum development of the currency reserves. First, the level of currency reserves must be approved by the Bank Council, and, second, the National Bank is obliged to orient itself "to the development of the Swiss economy" in building up currency reserves. Under the revised law, the Bank Council must therefore ensure that the National Bank does not set aside more provisions than required for building up adequate currency reserves.

Achieving profits is one of the indisputably welcome side effects of the central bank's activity, however only in so far as this does not threaten its core mandate.