The Swiss franc is the currency of the Swiss Confederation and the Principality of Liechtenstein. It is divided into 100 centimes. The currency symbol is Fr. and its ISO abbreviation is CHF. The abbreviation Rp is used for centimes. In Campione d’Italia, the Swiss franc is the official currency. In Büsingen (Upper Rhine), most payments are made in Swiss francs, even though the Euro is the official currency.
History of the Swiss franc
Until 1798, the issuing of coins came under the purview of the cantons, individual lordships, towns and abbeys. In the same year, the French introduced a single franc currency. As of immediately, one franc was worth as much as 10 Bernese chunks or 6.614 grams of pure silver or 1.4597 French francs. In 1803, mediation returned the sovereignty of coins to the cantons. However, the Swiss franc was set at 6.77025 grams of fine silver or 1.5 French francs by the day’s statutes and was designated as a single currency. The canton’s face-value coins were based on this unit, while secondary coins were often minted based on the old unit.
1850 – Introduction
When Switzerland was created as a federal state in 1848, the Confederation was once again the responsible authority for the currency. The franc was now based on the French (silver) franc and was reintroduced as Switzerland’s currency on 7 May 1850 with the “Federal Coinage Act”. From this year on, new coins were minted and issued in the following year. The initials of the famous sculptor, medalist Antoine Bovy (A. BOVY), can be found on the edge of the Swiss franc coins from 1850 and 1851.
World Economic Crisis and Latin Coin Union – 1865 -1927
Switzerland was a member of the Latin Coin Union between 1865 and 1927, which meant that Belgium, Italy, Greece and France were allowed to use gold and silver coins as official currency. The unit of the respective national currency was 4.5 grams of silver and 0.290322 grams of gold. This is what was stipulated by the Coin Union. Furthermore, gold parity was still maintained, even though the Union had become obsolete around 1910 and ended in 1927. Due to the consequences of the global economic crisis, the Swiss franc had to be devalued to 30 percent in 1936.
The Bretton Woods System – 1949 – 1973
The Swiss franc was linked to the US dollar until the Bretton Woods system collapsed in 1973.
Since then, the dollar has also lost value as a result of the poor exchange rate.
2011 – Investment currency
Since the collapse of the Bretton Woods system, the Swiss franc has been considered a crisis-proof and stable currency due to its spontaneous exchange rate, which benefits from the development of the Swiss economy. The fact that the Swiss franc became an internationally sought-after investment currency is due to investors’ confidence in Switzerland as a financial centre and the political and economic stability of the country. When political or economic disasters have occurred, Switzerland has proven to be safe for investors. This was reflected positively in the upward trend in the Swiss franc exchange rate due to rising demand from the financial markets.
Currency intervention and the reasons for doing so – 2011
The Swiss franc was in high demand due to the outbreak of the euro crisis and the high national debt of the United States. This was so pronounced that the exchange rate rose by over 30 percent against the euro and 25 percent against the US dollar between May 2010 and August 2011. The Swiss National Bank (SNB) took various measures to stop the overvaluation of the Swiss franc. The higher-valued currency had an adverse effect on the economy and entailed the risk of deflation. In 2009 and 2010, the bank bought up foreign securities, in 2011 the key interest rate was lowered and the money supply was increased. In 2011, the Swiss National Bank announced the implementation of the exchange rate target of at least CHF 1.20 per euro.
2015 – The cap on the exchange rate dropped
The minimum exchange rate set by the Swiss National Bank in 2011 was dropped on 15 January 2015. At the same time, interest on current accounts exceeding an allowance was increased from 0.5 percentage points to -0.75 per cent. As early as December 2014, the Swiss National Bank announced the introduction of negative interest rates.
The Swiss banking industry
The stable and secure Swiss franc is undoubtedly one of the reasons why Switzerland is known as a country of banks. Countless banks operating worldwide have established themselves here or even originated here. Our stable political system has also played a significant role in this over the years.