The Swiss Franc (“CHF”) is ranked fifth in global foreign exchange market turnover after the USD, Euro, GBP, and Japanese yen. CHF is the currency of Switzerland and Liechtenstein and is also used in the Italian enclave of Campione d'Italia and the German enclave Büsingen. The CHF has basically maintained its proportion of use as a global currency reserves since 1995, varying between 0.2% and 0.4%.

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History of the Franc

In 1798, a silver currency based on the French franc was created and adopted by various Swiss cantons. However, the CHF composed only a portion of the very large number of currencies being used in Switzerland. In 1848, as part the Swiss Federal Constitution, issue of money was restricted solely to the federal government, which adopted the CHF as the official monetary unit of Switzerland in 1850. In 1865, as part of the Latin Monetary Union, Switzerland adopted a gold standard, which it legally maintained until 2000. Although Switzerland had revised its currency value since 1865 (for example, in 1936 due to the Great Depression, and in 1945 as part of the Bretton Woods system), the new value was always stated with relation to gold. However, with the breakdown of Bretton Woods in the early 1970s, Switzerland adopted a flexible exchange rate regime.

Future Outlook

The Swiss economy has recently enjoyed several years of healthy growth and high utilization of production factors. But from January 2002 to December 2007, the Swiss franc lost almost 17 percent of its value against the Euro. Considering the low level of the Swiss franc against the Euro, the high price of oil, and the high degree of resource utilization, once can expect an inflationary effect and a subsequent increase in interest rates. Similarly, a worsening global economic situation is increasing the market’s perception of risk, leading to increased investment in low risk currencies such as the CHF.

Other Currencies:

The Yen
The Pound
The US Dollar
The Euro

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