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What is the Swiss National Bank?

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The Swiss National Bank is the constitutionally created central bank of Switzerland. In an effort to control economic growth and ward off inflation, the Swiss National Bank (SNB) can alter monetary availability and fiscal policies. Its stated mission is to maintain price stability and increase opportunities for economic growth.

An independent company, the Swiss National Bank was created in 1906-1907 by a provision of the Swiss constitution. Though a publicly owned company, the largest shareholders tend to be other banks, who naturally share an interest in economic policy. Two-thirds of all profits made by the SNB are given to the local governments of the Swiss regions, while about 6% is distributed to shareholders. The bank is run from two major offices in Berne and Zurich, with many additional regional offices throughout Switzerland. Generally, the board of directors for the SNB consists of three high-level members of the two main branches of the bank.

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The general goal of the SNB is to keep constant watch and check on the economy. Like a leash on a dog, the Swiss National bank aims to keep the economy from running away with inflation. The basic function of the SNB is to set reasonable price-stability goals, adjust the money supply accordingly, then record economic data for a period until a new goal can be set or adjusted. In addition to the expansion or contraction of money supply, the SNB can also influence the economy through interest rate changes and mandating bank reserves.

Despite the country's relatively small size, Switzerland possesses one of the largest reserves of gold bullion on Earth. These reserves have long been in the control of the SNB, which maintains a great deal of secrecy regarding the gold. Until the late 20th century, the Swiss National Bank generally kept gold reserves safely locked away, but some modern policy shifts have lead to the liquidation of extensive amounts of the vast gold reserves.

Though touted as one of the most stable banks in history, the Swiss National Bank has not always remained free from controversy. During World War II, Swiss neutrality in the war effort meant that the bank continued to deal with Nazi accounts. According to an SNB statement in 1998, the bank admitted receiving over $400 million USD in gold from Nazi sources during the war, at least $300 million USD of which was from looted countries. Since Nazis used the looted money to finance their continuing war efforts, this revelation has blackened the neutral reputation of Switzerland in some people's minds.

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