After losing billions
No money for cantons – economists criticize SNB
The economists at the SNB Observatory take a critical view of the Swiss National Bank’s (SNB) decision not to make a distribution to the federal government and the cantons because of the massive annual loss. They describe the procedure for distributing profits as “incomprehensible”.
The SNB leadership around President Thomas Jordan is under criticism because of this year’s payout waiver. In the course of the massive annual loss, the SNB waived a distribution to the federal government and the cantons. (Archive picture)
According to estimates by the group of economists, the equity of the SNB may have shrunk from around CHF 200 billion to CHF 66 billion. Even the distribution of the maximum amount of 6 billion would make “no significant difference”. Behind the “SNB Observatory” are the Basel economics professor Yvan Lengwiler, the Geneva professor emeritus Charles Wyplosz and the EFG chief economist and former central banker Stefan Gerlach.
In addition, the SNB is not using its provisions for foreign investments of almost 96 billion at the end of 2021 to absorb its foreign currency loss of 132 billion. The decision raises the question of the purpose of these provisions, the report says. Despite the loss, the SNB had announced that it would increase the provisions for currency reserves by 9.6 billion: “This policy lacks any economic and financial logic,” it says.
Probably no payout next year either
As a result, the high losses would be taken from the distribution reserve, which would shrink from 102 billion in the previous year to -39 billion. This also makes it likely that there will be no distribution again next year, according to the SNB Observatory.
The huge annual loss itself reflects the risks of a “huge balance sheet” for the economists. In good years this means big profits and in bad years massive losses. At least the SNB Observatory states that the National Bank allowed the Swiss franc to appreciate because it recognized the rising inflation earlier than other central banks. “It is reassuring to see that the SNB has focused on price stability and not on profitability,” the economists praised.
At the beginning of the week, the SNB reported an annual loss of CHF 132 billion according to provisional calculations. The loss makes it impossible to distribute profits to the federal government and the cantons, the National Bank said. The SNB intends to publish the detailed report on the annual financial statements on March 6, 2023. (SDA)