Swiss National Bank

The Swiss National Bank (SNB) is the central banking authority of Switzerland.

It represents the country’s monetary policy as an independent central bank and acts in accordance with the interests of the country as a whole.

The SNB’s primary goal is to ensure price stability, while taking due account of economic developments.

In doing so, the central bank creates an appropriate environment for economic growth.

One of the main functions of the bank is to ensure and implement monetary policy. The SNB mainly performs this feat by setting the SNB policy rate.

As such, the SNB seeks to keep the short-term Swiss franc money market rates close to the SNB policy rate.

In order to influence monetary policy conditions, the SNB also intervenes in the foreign exchange market, as necessary.

Swiss National Bank Causes Crisis in Forex Markets

The SNB is most remembered for SNB abruptly announcing its decision to abandon its currency peg to the Euro on January 15, 2015.

This led to upheaval in the forex market causing a Black Swan event, given its sizable impact on currency markets and the retail brokerage industry.

In particular, on January 15, 2015, the Swiss franc (CHF) quickly rose by almost 30 percent in value against most major currencies.

This lasted for nearly 45 minutes during which there was virtually no liquidity in the currency.

Consequently, this made it impossible to exit trades or for most brokerages to reconcile their exposures. As a result, stops were not honored and most traders saw their accounts totally wiped out.

This also led to enhanced losses in the absence of negative balance protection, a particular vulnerability at this time for retail traders, which resulted in massive losses.