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Swiss Francs

The Swiss franc is the official currency of Switzerland. The Swiss franc as we know it originates from the mid-19th Century. Before this, each of the many independent cantons which made up the geographical area we now know as Switzerland minted their own coins. To add to the confusion, foreign currency was also routinely acceptable throughout the area, and some private banks even produced their own bank notes. This meant that it was estimated that there were at least 8,000 different coins and notes in circulation in the local economy by 1850.
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This situation was clearly unsustainable, so as the fledgling country emerged from the long unification process, the new Swiss Federal Constitution asserted that only the new federal government was allowed to issue currency in the new country. Hence the process began whereby the Swiss franc became the official monetary unit in the new Switzerland. It was finally introduced in 1850, replacing the countless numbers of different currencies previously in circulation. The new national currency was issued with a value equivalent to its neighbour, the French franc.

The Swiss franc has been and still is regarded as one of the world’s foremost safe haven currencies, and is highly valued as a reserve currency by governments all around the globe. This is largely because of the reputation of the country for political stability (it has a proud history of neutrality in times of conflict) and economic prudence, resulting in an inflation rate which has been consistently and reliably very low. Until the turn of the current century, the currency was also backed a very large gold reserve, which was guaranteed by law to be worth at least 40% of the currency in circulation. In recent years, this obligation has been dropped, but the currency remains in high esteem. Today, the vast majority of foreign reserves (nearly 85%) are held in US dollars or euros, but the Swiss franc remains one of the top ten reserve currencies.

The Swiss franc was badly affected by the 2008 banking crash. Lack of confidence in the established world currencies led to the franc being highly sought after as a safe haven. The value of the Swiss franc against the dollar and the euro began to rise unsustainably as currency traders attempting to avoid the uncertainties of the world economy demanded more of the previously reliable and stable franc. This rise in demand was heightened when the Greek sovereign debt crisis hit world markets in 2011. Ironically, all this excess demand was too much for what is the official currency of a relatively tiny country in world trade terms. As a result, the value of the previously stable Swiss franc was rising unsustainably. This led the Swiss government to cap its value, to prevent further damage to the economy. This action took the financial markets by surprise, causing it to crash in value (which was indeed what the government may have intended). In any case, this shock move had its desired effect, and the new cap was removed, again without warning, in early 2015.

The Swiss franc continues to be on iconic world currency, one of the few independent European currencies remaining in a euro dominated continent. Doubtless a few Swiss francs do end up in the accounts of UK registered online bingo companies, where such a highly esteemed currency is usually readily accepted.

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