How protected is the Swiss National Bank compared with the US Federal Reserve?

The Swiss National Bank is just a few steps from the Federal Palace. Keystone / Peter Schneider

The independence of the Swiss National Bank (SNB) is enshrined in the constitution, a safeguard its US counterpart does not enjoy. But where does this concept come from, and how does Switzerland compare internationally?

US President Donald Trump makes no secret of his views on the decisions taken by the Federal Reserve. He has not just applied public pressure but also temporarily appointed one of his closest economic advisers, Stephen Miran, to the seven-member Board of Governors of the Federal Reserve System (FED).

Many experts are concerned by Trump’s behaviour. “These actions are undermining the norm of central bank independence,” Carolina Garriga of the University of Essex told Swissinfo. “But this is no different than the effect of other actions undermining other democratic and technocratic institutions and norms, unfortunately.”

However, while the independence of the US judiciary system is enshrined in the US constitution, the same cannot be said for the country’s central bank.

Where does central bank independence (CBI) come from?

Granting independence to central banks is a relatively new concept. It emerged as a response to inflation trends following the end of the Bretton Woods system. The norm of independent central banks spread during the 1980s and 1990s. In Switzerland, CBI has been enshrined in the country’s constitution since 1999.

Read our article on the floating of the Swiss franc:

“In the 1980s, many central banks were effectively part of their finance ministries – 20 years later, most had established a more or less independent structure,” says lawyer Hans Kuhn, who headed the legal services at the Swiss National Bank from 2001 to 2014.

Why did this happen? The root cause lies in economic research. “A large number of economic studies have empirically shown the negative corelation between CBI and inflation,” Kuhn explains. In other words, independent central banks are meant to keep prices stable, regardless of a potentially short-sighted government. Even if the political landscape changes.

Garriga also highlights this in a recently published academic article. Garriga’s data on central bank independence in the worldExternal link reveals just how differently the norm is applied across countries. In nations such as India, as well as Japan and Australia, central banks are not legally independent.

In countries such as Belarus, Venezuela and Turkmenistan, but also in democratic countries such as Ecuador, Garriga has observed “significant restrictions” on independence since the turn of the millennium. According to her data, CBI has also deteriorated in China and Indonesia.

What are the democratic criticisms of CBI?

Recent events in the US have brought more attention to critics who see the concept of central bank autonomy as undemocratic.

One of those critics is political theorist Leah Downey, who questions the idea that CBI leads to price stability. The empirical evidence, she argues, is “more mixed than usually admitted”, and the data behind many frequently cited studies is limited. Downey also notes that arguments in favour of independence effectively assume “that monetary policy is unique”, unlike any other policy area. For her, the complexity of monetary policy is no reason to grant experts “autonomy over policy”.

Downey also believes that, in the long run, CBI undermines “the health of democracy”. She argues that monetary policy should continue “to be conducted by a central bank full of experts and stakeholders that is under the active management of the legislature”.

At the same time, Downey sees Trump’s actions as “clearly not democratic”. If Trump really wanted to democratise monetary policy, he would have taken the matter to Congress, she says.

Jerome Powell is President of the FED. At the end of September 2025, US President Donald Trump posted a cartoon about how he would sack him. EPA/JIM LO SCALZO

Concentrating power in the hands of a single individual is also unconstitutional. “The framers of the US constitution explicitly gave budgetary powers and the power to print and regulate money to the legislature, not the executive,” Downey says.

What’s the situation in Switzerland?

The FED’s independence is enshrined in US law. In Switzerland, however, nearly 60% of eligible voters approved the new federal constitution in spring 1999, thereby – knowingly or not – endorsing the SNB’s independence. Article 99 states that “as an independent central bank, the Swiss National Bank shall follow a monetary policy which serves the general interest of the country”. The Swiss authorities are responsible for the “cooperation and supervision” of its administration.

In Switzerland, any amendment to the constitution must be put to a nationwide vote. This means that – should the political landscape shift – it would be harder for the government and parliament to challenge the central bank’s independence than in the US. Economist Ernst Baltensperger describes this to Swissinfo as a “much higher democratic hurdle”. Even more decisive, he argues, is the element of “self-commitment”. In his view, both parliament and the people feel bound to uphold the principle of CBI.

In Switzerland, an 11-person Bank CouncilExternal link supervises the work of the SNB, a joint-stock company with a majority of shares held by the 26 cantons. Five council members are elected by the general assembly, while six are appointed by the government. The members of the Bank Council are expected to represent science, business and politics and have a background in economics.

At the moment, for example, the council includes a finance professor and the president of Switzerland’s largest trade union. As a supervisory body, the Bank Council proposes new directorate members to the government when changes arise. The government then appoints them for six years, which is longer than a parliamentary legislature.

Is the SNB a democratic institution?

Does this make the SNB an institution of Swiss democracy? Hans Kuhn, the former head of SNB legal services, says: “Article 99 grants enormous power. However, its structure is regulated by law. There is accountability, and there is a tension that must be understood and carefully balanced.”

Above all, Kuhn believes that CBI is “widely accepted and respected”. “The respect is strong, sometimes even excessive. I often feel that people hold back because they don’t fully understand the subject,” he says.

Yet many motions in the Swiss parliament affect the SNB. At the end of 2024, the business federation economiesuisse presented its analysis of “Swiss Trump moments”. According to the study, all political parties have launched motions concerning the SNB since 2014, with the majority coming from the left. About 15%, the study says, addressed the bank’s mandate, and just under a third focused on its balance sheets. How many of the motions were successful is unknown, economiesuisse told Swissinfo.

Kuhn takes a nuanced view when parliament and the political public debate how the SNB’s profits should be used. “It’s not forbidden to think about the SNB,” he says. “But its core mandate must not be meddled with.” He adds that any interference with interest rates by parliamentarians would be particularly delicate.

“Compared to the US, the SNB is a robust and sluggish institution,” Kuhn says. The FED, he explains, doesn’t have a bank council to propose candidates. If a Swiss government were critical of the SNB and wanted to replace its leadership, the process would be pretty slow.

How could recent US developments affect the world?

“In the US, this can happen very quickly,” says Kuhn, citing the frequent disregard for social conventions. “When political actors disregard these norms, they can quickly damage these fragile structures.” He believes that Stephen Miran – unlike the other two FED governors appointed by Trump – lacks the legally required economic skills.

Kuhn considers it difficult to predict the ripple effects of Trump’s actions, but he “trusts that reason will prevail”. He believes many countries will continue to uphold the norm of CBI and has high hopes that other states, even when it comes to tariffs, have not resorted to retaliation. Trump is certainly not the first head of state to pressure a central bank. Japan’s former prime minister Shinzo Abe did the same to the Bank of JapanExternal link in 2013.

However, when the US government puts pressure on the FED, the consequences can ripple across the global economy. “The dollar is the global anchor currency,” Kuhn says. “If the anchor value collapses, the risks are enormous.”

Edited by David Eugster. Adapted from German by Billi Bierling/ts