Switzerland is a small economy, but its central bank has an outsized influence on currency markets. The Swiss National Bank, or SNB, manages one of the world’s most popular safe-haven currencies, and its decisions on rates and currency intervention can move the franc sharply. Here is what it does and why traders watch it.
What the SNB is
The Swiss National Bank is Switzerland’s central bank. It is responsible for monetary policy, with a mandate to keep prices stable while taking account of the economy. In practice, it aims for inflation between zero and two per cent. Unusually for a central bank, it is a listed company, with shares traded on the Swiss stock exchange, although most are held by Swiss cantons and public institutions and the shares behave very differently from normal stocks.
How it sets policy
The SNB sets a policy interest rate, known as the SNB policy rate, and holds scheduled assessments four times a year, usually in March, June, September and December. Unlike many central banks, it typically announces decisions quarterly rather than every six weeks, so each meeting carries more weight. It also publishes a summary of its deliberations after each meeting, which gives traders more detail on its thinking.
The franc problem
The Swiss franc tends to strengthen when investors are nervous, because Switzerland is seen as stable, with low debt and a strong financial system. Our guide on why the Swiss franc is seen as a safe haven explains that role in more detail. A strong franc is a mixed blessing for Switzerland. It keeps imported inflation low, but it hurts exporters and can push inflation below target.
That is why the SNB has a long history of leaning against franc strength. Its tools include cutting interest rates, sometimes below zero, and intervening directly in currency markets by selling francs and buying foreign currencies. Those interventions have left it with one of the largest balance sheets of any central bank relative to the size of its economy.
The 2015 shock
The most famous episode came in January 2015. For more than three years, the SNB had capped the franc at 1.20 per euro by promising to buy unlimited euros. Then, without warning, it dropped the cap. The franc surged by around 30 per cent in minutes at one point, brokers collapsed and traders on the wrong side suffered huge losses. It remains a powerful reminder that central bank commitments can change suddenly, and that leverage can be dangerous in pairs that look stable.
What traders watch
Ahead of each assessment, traders look at Swiss inflation, the strength of the franc against the euro and the dollar, and any comments from SNB officials about intervention. After decisions, they read the statement for hints on future rate moves and whether the bank is willing to sell francs. The SNB’s weekly sight deposit data is also watched as a rough signal of intervention activity.
The main pairs affected are EUR/CHF, USD/CHF and GBP/CHF. Global risk events matter too, because they can drive safe-haven flows into the franc regardless of what the SNB says.
The beginner takeaway
The SNB is a central bank that often fights its own currency. Understanding that tension helps explain many franc moves, and the 2015 shock shows why sensible position sizing matters even in calm markets. If you want to see how you approach risk around central bank events, take the free Samuel & Co Trading Trader Assessment.
