Who is the SNB?
The Swiss National Bank is Switzerland’s central bank. It has the exclusive right to issue banknotes (note-issuing privilege) and has been mandated to conduct the country’s monetary policy. In accordance with the Constitution and Swiss law, the SNB is independent in the fulfilment of its mandate, holds regular discussions with the Federal Council, is accountable to the Federal Assembly and is obliged to provide the general public with periodic information on its activities. This overview presents the key tasks and the organisation of the SNB.
Mandate
The SNB conducts the country’s monetary policy as an independent central bank. This mandate is enshrined in the Constitution and the National Bank Act (NBA). The Constitution obliges the SNB, as an independent central bank, to conduct a monetary policy that serves the interests of the country as a whole. The NBA describes the mandate in more detail: “It shall ensure price stability. In so doing, it shall take due account of economic developments.”
Monetary policy strategy
In its monetary policy strategy, the SNB sets out the manner in which it operationalises its statutory mandate. The strategy consists of three elements: a definition of price stability, a conditional inflation forecast over the subsequent three years, and the implementation of the SNB's monetary policy by influencing the interest rate level and the exchange rate.
Stable prices are an important condition for growth and prosperity.
Price stability
Stable prices are an important condition for growth and prosperity. Inflation (a sustained increase in the price level) and deflation (a sustained decrease in the price level) both impair economic activity. They hinder the role of prices in allocating labour and capital to their most efficient use, and result in a socially undesirable redistribution of income and wealth.
The SNB equates price stability with a rise in the Swiss consumer price index (CPI) of less than 2% per annum. Deflation also breaches the objective of price stability.
Cash
The SNB is entrusted with the note-issuing privilege. It supplies the economy with banknotes that meet high standards with respect to quality and security. The SNB issues banknotes and coins commensurate with demand for payment purposes, offsets seasonal fluctuations, and withdraws damaged banknotes and coins. The SNB is also charged by the Confederation with the task of coin distribution.
The production of banknotes
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Cashless payment transactions
The SNB has the task of facilitating and securing the operation of cashless payment systems. It fulfils this duty primarily as commissioning party and system manager of the Swiss Interbank Clearing (SIC) payment system. The SIC system is the central payment system in Switzerland for payments in Swiss francs. Via this system, banks and other financial market participants settle payments between financial institutions as well as retail payments.
Management of currency reserves
The assets of the SNB fulfil important monetary policy functions. They consist mainly of gold and foreign currency investments and, to a lesser extent, financial assets in Swiss francs. Their size and composition are determined by monetary policy requirements.
Contribution to financial stability
Financial stability means that banks and financial market infrastructures (FMIs) can perform their functions and are resilient to potential shocks and disruptions. Financial stability is an important prerequisite for economic development and effective monetary policy implementation.
The National Bank Act confers on the SNB the task of contributing to the stability of the financial system. The SNB performs this task by analysing sources of risk to the financial system, overseeing systemically important FMIs, and helping to shape the operational framework for the Swiss financial centre. A particular focus of attention is the resilience of systemically important banks. Every year, the SNB publishes a financial stability report, in which it assesses Swiss banking sector stability and discusses developments and risks in the economic environment as a whole as well as in the banking sector. In a crisis, the SNB fulfils its mandate by acting as lender of last resort.
International monetary cooperation
The objective of international monetary cooperation is to promote the functioning and stability of the international monetary and financial system and help overcome economic crises. As a small open economy, Switzerland is highly integrated with the global economy. It therefore derives particular benefit from a stable international monetary and financial system.
Within the framework of international monetary cooperation, the SNB participates in the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Financial Stability Board (FSB), the Organisation for Economic Co-operation and Development (OECD), the G20 Finance Track at the invitation of the G20 presidency, and the Central Banks and Supervisors Network for Greening the Financial System (NGFS).
The SNB fulfils its monetary policy mandate independently of the Swiss government and parliament.
Independence and accountability
The SNB fulfils its monetary policy mandate independently of the Swiss government and parliament. This form of organisation reflects the historical experience that independent central banks are better able to maintain price stability than those subordinated to political authorities. As a counterbalance to its independence, the SNB is accountable to the Federal Council, the Federal Assembly and the general public.
Relationship with the Confederation
Since the SNB performs a public function, it is administered with the cooperation of the Confederation and is under its supervision. Thus, the Federal Council appoints the majority of the Bank Council members, including the President and the Vice President, as well as the members and deputy members of the Governing Board, on the recommendation of the Bank Council. In addition, the Federal Council approves the SNB’s Organisation Regulations issued by the Bank Council.
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Organisation
Special-statute joint-stock company
The SNB is a joint-stock company governed by special provisions under federal law. It is administered with the cooperation and under the supervision of the Confederation in accordance with the provisions of the National Bank Act. SNB shares are traded on the Swiss stock exchange. The share capital amounts to CHF 25 million, about half of which is held by cantons, cantonal banks and other public institutions. The remaining shares are largely in the hands of private individuals. The Confederation does not hold any shares.
General Meeting of Shareholders
The General Meeting of Shareholders is held once a year, as a rule in April. Owing to the SNB’s public mandate, the powers of the shareholders’ meeting are far less extensive than those of joint-stock companies under private law.
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Bank Council
The Bank Council oversees and controls the conduct of business by the SNB. It consists of eleven members. Six members, including the President and Vice President, are appointed by the Federal Council, and five are elected by the General Meeting of Shareholders. The Bank Council sets up four committees from its own ranks: the Audit Committee, the Risk Committee, the Compensation Committee and the Nomination Committee.
Governing Board
The SNB’s management and executive body is the Governing Board. It consists of three members. The Governing Board is responsible, in particular, for monetary policy, asset management strategy, contributing to the stability of the financial system, and international monetary cooperation. It represents the SNB in the public sphere.
The Enlarged Governing Board consists of the three members of the Governing Board and their deputies, and is responsible for issuing the strategic guidelines for the SNB’s business operations.
