The Real Franc Surprise? Swiss Fallout Wasn't as Bad as Feared
- Doomsday scenarios for Switzerland's economy didn't pan out
- SNB set to rack up record loss for 2015 due to rallying franc
NYON, SWITZERLAND - AUGUST 13: Residential apartment blocks stand on August 13, 2015 in Nyon, Switzerland. Risks to the Swiss real estate market increased marginally in the second quarter as growth in home prices and mortgages outpaced that of income.
Photographer: Harold Cunningham/BloombergA year after the Swiss National Bank suddenly abandoned its currency cap, it looks like the doomsday scenarios for the country haven’t panned out. But it’s still too early for SNB President Thomas Jordan to pop the champagne.
On paper, the SNB may have inflicted the biggest wound on itself. It’s set to incur a record annual loss of 23 billion francs ($23 billion) after its foreign-exchange holdings depreciated in value due to the franc’s ascent from the cap of 1.20 per euro to about 1.09 now. While that’s a book loss, a repeat could jeopardize future payouts to Switzerland’s cantons.