Swiss Gold Reserves: The Swiss National Bank’s Gold
Swiss gold reserves amount to 1,040 tonnes and belong to the Swiss National Bank (SNB). The holdings have been unchanged since the end of 2008. Measured against the SNB’s total foreign reserves, the gold share is comparatively small at around 15 per cent.
How much gold does Switzerland have?
The SNB holds 1,040 tonnes of gold, mostly in bars and a smaller part in coins. This quantity has not changed since the end of 2008. In the World Gold Council ranking, Switzerland is in eighth place, including the IMF and the ECB.
The fact that gold makes up only around 15 per cent of reserves is due to the SNB’s very large foreign currency holdings, next to which the gold holdings look small.
Where is Switzerland’s gold stored?
According to the SNB, around 70 per cent of the gold is in Switzerland, around 20 per cent at the Bank of England in London and around 10 per cent at the Bank of Canada. The SNB explains the distribution by saying it wants to have access to its reserves even in a crisis. Decentralised storage reduces the risk associated with a single location.
This means around 312 tonnes of Swiss gold are stored abroad: about 208 tonnes in London and about 104 tonnes in Canada. The Bank of England was already the main settlement location for the SNB’s gold sales. SNB Chairman Thomas Jordan first disclosed the distribution publicly in April 2013. It has not changed since – unlike in Germany, Austria or India, there has been no repatriation in Switzerland.
The gold sales from 2000
For a long time the Swiss franc was tied to gold by law. The SNB was only allowed to buy or sell gold at the official parity of CHF 4,595 per kilogram – a third of the market price at the end of the 1990s. In 1997 an expert group concluded that reserves amounting to 1,300 tonnes of gold were no longer needed for monetary policy.
In June 1999 the SNB declared half of its holdings at the time of 2,590 tonnes no longer necessary for monetary policy. After the constitutional reform of April 1999 and the new Currency Act of May 2000, the sales could begin. 1,170 tonnes fell under the Washington Agreement on Gold, which limited the sales of the participating European central banks to a combined 2,000 tonnes. The SNB sold the remaining 130 tonnes under the follow-up agreement and completed the programme on 30 March 2005. The proceeds went to the Confederation and the 26 cantons.
Most of the sales were settled via the Bank of England. In the follow-up agreement of 2009, the participating central banks agreed to sell no more than 400 tonnes per year and no more than 2,000 tonnes over five years. The SNB stated at the time that it planned no further sales for the foreseeable future. It has kept its holdings constant since the end of 2008.
The 2014 gold initiative
On 30 November 2014, Switzerland voted on the popular initiative “Save our Swiss gold”. It demanded that the SNB hold at least 20 per cent of its assets in gold, no longer be allowed to sell gold and store all of its gold in Switzerland.
The Federal Council, Parliament and the SNB opposed the initiative. Voters rejected it with 77.3 per cent No, and it did not win a majority in any canton. According to the official result, 1,974,137 No votes stood against 580,528 Yes votes, with a turnout of 49.81 per cent.
Legal basis
Under Article 99 of the Federal Constitution, the SNB holds part of its currency reserves in gold. Gold complements the foreign exchange investments, the reserve position at the IMF and the special drawing rights. The 2014 initiative would have added a fixed gold quota to the Constitution, introduced a sales ban and ended storage abroad – the majority rejected this.
