Swiss National Bank’s balance sheet shrinks nearly 8% in September, data shows

THE Swiss National Bank’s (SNB) balance sheet shrank by nearly 8 per cent in September, data showed on Monday (Oct 31), as plunging valuations on its stock and bond investments and the high value of the Swiss franc reduced the value of its foreign investments.

The 55.4 billion Swiss franc (S$78.4 billion) decline in the value of the central bank’s foreign currency investments was the main reason for its balance sheet declining to 889.5 billion francs from 964.6 billion francs a month earlier.

The value of SNB’s portfolio, which includes stocks in companies such as Starbucks and Apple as well as bonds, is adjusted every quarter to reflect their market value and every month to take into account exchange rate moves.

Bonds around the world have lost value as central banks, including the SNB, raised interest rates to combat inflation, while stock markets have dropped due to concerns over an end to easy money and an economic slowdown.

Earlier on Monday, the SNB reported how a plunge in value of its investments pushed the central bank into a nine month loss of 142.2 billion francs, the worst in its 115-year history and slightly more than the entire economic output of Morocco.

The balance sheet data on Monday also showed how the SNB has been mopping up excess liquidity in Switzerland as it aims to steer the market interest rate towardss the policy rate of 0.5 per cent it introduced at the end of September.

The SNB spent 55.3 billion francs on repurchase agreements (REPOS) and 17.8 billion francs on SNB bonds in September, which reduced the level of sight deposits to 540.5 billion francs from 639 billion in August, the data showed. REUTERS