Extending the central bank’s capital base must be prioritised over distributing profits to Switzerland’s government and cantons, he told an audience of economists in Zurich on Friday.
His remarks may indicate the SNB won’t make a payout to the state for this year, even though it achieved a solid profit in the first nine months. The institution already skipped disbursements for two years in a row after posting a record loss in 2022.
While distributions are governed by an agreement with the finance ministry, the central bank has some leeway as to how much of its earnings it holds back as reserves. Due to the size of its assets, which are currently worth some CHF840 billion ($940 billion), the institution’s performance depends strongly on market developments and can change rapidly.
Schlegel said the large balance sheet was a major side effect of foreign-currency purchases that were necessary to ease pressures on the Swiss franc after 2008’s global financial crisis. Not doing so would have increased deflation risks, he added.
“The franc is a safe-haven currency,” Schlegel said. “The effect of the currency on inflation is significant because of the openness of the Swiss economy.”
The size of the SNB’s balance sheet is the result of its monetary policy, he added, saying that all foreign-exchange interventions – in a policy mix with interest rates – follow the goal of maintaining price stability in the medium-term.
Schlegel also echoed previous remarks that the SNB doesn’t exclude taking borrowing costs negative again if necessary.
With Swiss inflation at just 0.6%, some economists worry that it could undershoot the SNB’s 0-2% target range. Policymaker Petra Tschudin said on Thursday that consumer-price growth is “comfortably” in the desired range.
Living longer: What do you think about the longevity trend?
The longevity market is booming thanks in part to advances in the science of ageing. What do you think of the idea of significantly extending human lifespan?
Glacier collapses burying large parts of Swiss village Blatten
This content was published on
A gigantic avalanche of ice, mud and debris has buried a large part of the village of Blatten after a major glacier collapsed.
Swiss government seeks better labour integration of Ukrainian refugees
This content was published on
The Swiss government has now set a goal of 50% of Ukrainian refugees to be in employment by the end of 2025, compared with 38% at present.
Swiss government greenlights Ruag sale of Leopard tanks to Germany
This content was published on
The defence company Ruag MRO is allowed to sell 71 Leopard 1 battle tanks to Germany. However, the tanks may not be sold to Ukraine.
Foie gras sold in Switzerland must declare painful production process
This content was published on
Starting July 1, the sale of foie gras in Switzerland must make reference to the painful procedures performed on the animal.
Swiss economics minister seeks progress on US tariff negotiations by July
This content was published on
Swiss Economics Minister Guy Parmelin is hoping for results in the tariff negotiations with the US by the beginning of July.
UN weather agency expects new temperature record soon
This content was published on
A new global temperature record is likely to be set in the next five years, according to the World Meteorological Organisation in Geneva.
Geneva proposed as possible site for Ukraine-Russia talks
This content was published on
US special representative for Ukraine, Keith Kellogg, has said that Geneva is being considered as a venue for talks between Russia and Ukraine.
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.