Bloomberg News

SNB Faces Losses on Foreign-Exchange Reserves, Danthine Says

June 16, 2011

(Updates with no plan to sell currencies in fourth paragraph.)

June 16 (Bloomberg) -- Switzerland’s central bank may face further losses on its foreign-exchange reserves, Swiss National Bank governing board member Jean-Pierre Danthine said.

The SNB’s foreign-currency holdings, built up last year as it tried to contain the Swiss franc’s gains, cause “increased financial risk” and “hold the potential for further losses,” Danthine said today in a speech in the Swiss capital, Bern.

The Swiss currency has gained 16 percent against the euro since April 29, when the SNB reported a profit of 1.86 billion francs ($2.2 billion) in the first quarter. That followed a loss of 19.2 billion francs in 2010, the biggest in the Zurich-based central bank’s 103-year history, as it bought euros and dollars to keep a lid on the franc.

“Selling our foreign-exchange reserves (and buying Swiss francs) is not an option at the moment,” Danthine said. “The only option for the SNB is therefore to diversify its risks.”

The central bank’s reserves include as much as 10 percent in equities and 5 percent in corporate bonds, he said.

--Editors: Jennifer M. Freedman, Tim Farrand

To contact the reporter on this story: Paul Verschuur in Zurich at

To contact the editor responsible for this story: Angela Cullen at

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