Swiss National Bank flexes its balance sheet to steer monetary policy
The Swiss National Bank (SNB) has been actively managing its balance sheet to implement monetary policy. Despite the balance sheet's theoretical ability to expand indefinitely, the SNB has no set size limit. Recently, the SNB's interest rate of zero has been expansionary, while the Swiss franc has appreciated significantly this year.
The SNB views its assets as a flexible tool that grows and shrinks based on monetary objectives. In the past, foreign-exchange interventions have led to substantial increases in the balance sheet, reaching over 880 billion francs ($1.08 trillion). Currently, the balance sheet's size rivals Switzerland's gross domestic product. The last foreign exchange market interventions were conducted in March 2022, demonstrating the SNB's commitment to managing its balance sheet to achieve its monetary goals.
The SNB's balance sheet plays a crucial role in monetary policy, with no fixed size limit. Its recent expansion, driven by an expansionary interest rate and foreign exchange interventions, reflects the bank's efforts to maintain stability in the Swiss economy.
