Swiss central bank faces record loss

A sign of the Swiss National Bank (SNB) is seen on its headquarters ahead of a press conference in Bern on December 15, 2022. – The Swiss central bank on December 15, 2022 raised its key interest rate by 50 basis points to 1%, continuing to tighten monetary policy despite the recent deceleration in Swiss inflation. (Photo by Fabrice COFFRINI / AFP)

Zurich, Switzerland (AFP)

The Swiss central bank said Monday it expects to have logged a record loss totalling 132 billion Swiss francs ($143 billion) last year, preventing it from providing funds to the government.

The Swiss National Bank fell into the red after posting a profit of 26.9 billion Swiss francs in 2021.

Most of last year’s losses — 131 billion Swiss francs — were linked to a drop in the value of its holdings in foreign currencies, the Swiss National Bank said in a statement.

It lost another one billion Swiss francs due to a fall in the valuation of its positions in the national currency.

“This net loss precludes a distribution for the 2022 financial year,” the bank said.

“This affects both dividend payments to the SNB shareholders and the profit distribution to the Confederation and the cantons,” it said, referring to the national and regional governments.

While its currency positions took major hits, the bank gained 400 million Swiss francs on its gold holdings.

For years the SNB maintained an ultra-loose monetary policy and built up foreign currency holdings to keep the strength of the Swiss franc in check.

But soaring inflation prompted the SNB to start raising rates and selling foreign currency holdings last year.

The definitive figures of the SNB’s losses will be published on March 6.

Last year, the bank distributed six billion Swiss francs to the confederation and cantons.