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The Swiss franc is the common currency in the Swiss Confederation and the Principality of Liechtenstein. It is also the official currency in the Italian exclave of Campione d’Italia and the German exclave of Büsingen on the High Rhine, where it is more strongly represented than the actual currency, the euro. The Swiss franc is divided into 100 centimes. Its ISO abbreviation is CHF, while the currency symbol is abbreviated as Fr. and centimes as Rp.
Image of the Swiss franc
Since the long-established Swiss population has one of the national languages German, Italian, French or Rhaeto-Romanic as its mother tongue, the designation of the Swiss franc and centime is also found in these four variants. In Swiss German, the currency is called Schwiizerfranke, in Italian Franco svizzero, in French Franc suisse, and the Rhaeto-Romanic term is Franc svizzer. The subdivision unit, on the other hand, is called Centesimi in Italian, Centimes in French and Rhaeto-Romanic rapeseed.
In the dialects of German-speaking Switzerland, the franc is often called Stutz. Some people trace the name back to the famous Fürth master mint Conrad Stutz. According to another explanation, Stutz is said to have been called “Tausch” (exchange) or “stutzen” (trade) in former times. Nowadays, the casual name “Stein” or “Stei” can also be found in some cases. In the French-speaking world, the franc is colloquially called balle (plural balls).
The first Franks
Until 1798 the issue of coins was the responsibility of the cantons, towns, abbeys and individual lordships. It was not until the foundation of the Helvetic Republic in the same year that a single franc currency was introduced. At that time the franc was divided into 10 Bernese batches, but also into 100 centimes. Although the sovereignty of coinage was returned to the cantons in 1803, the statutes nevertheless established the Swiss franc as the single currency.
Official introduction of the franc
When Switzerland became a federal state in 1848, the Confederation took over responsibility for the currency. With the “Federal Law on Federal Coinage”, the Swiss franc became the official currency in Switzerland on 7 May 1850. This was followed by the minting of new coins, the edge of which bears the signature of the famous Swiss coin engraver and sculptor Antoine Bovy in 1850 and 1851.
Latin Monetary Union
In the period from 1865 to 1927, when Switzerland was a member of the Latin Monetary Union, gold and silver coins from France, Italy, Greece and Belgium circulated as official currency. But by the 1910s, the Union was already losing considerable importance, until it finally ended completely in 1927.
Bretton Woods system
After the Second World War, efforts were made to create an international monetary order which, on the one hand, had the US dollar as its anchor currency and, on the other, combined the advantages of a flexible exchange rate system with those of a fixed one. Thus, the Swiss franc was pegged to the US dollar from 1945 until the collapse of the system in 1973. Since then, the dollar has experienced a downward trend. Thanks to its flexible exchange rate, the Swiss franc established itself in the same year as a stable and internationally coveted investment currency and maintained this image – further strengthened by the country’s political and economic stability – until 2011.
Fixed minimum exchange rate
As a result of a prolonged overvaluation of the Swiss franc, the Swiss National Bank (SNB) set a minimum price of EUR 1 = CHF 1.20 in September 2011. The reasons for the setting were, on the one hand, the stormy times in the PIIGS countries (an acronym from Portugal, Italy, Ireland, Greece and Spain) and, on the other, the fact that the United States was in the red. As a result, between May 2010 and August 2011, the Swiss franc’s exchange rate rose by over 25% against the US dollar and by over 30% against the euro. The SNB took various measures to stop the overvaluation of the Swiss franc, as the situation had a negative impact on the export-oriented economy and posed a risk of deflation. In addition to lowering the key interest rate, buying up foreign securities and increasing the money supply, the SNB also announced unlimited currency purchases in order to push through the price target of at least 1.20 francs per euro.
Abolition of the minimum exchange rate
From December 2014, the euro began to steadily lose value against the US currency, which in turn was accompanied by a weakening of the Swiss franc against the US currency. The additional interest rate hike in the United States and the easing of monetary policy by the European Central Bank (ECB) made intervention by the SNB necessary. When the amount of intervention that would have been necessary to maintain the minimum rate in January reached the CHF 100 billion mark, the Swiss central bank decided to finally release the euro exchange rate on 15 January 2015.
However, this decision did not leave the global currency market unaffected. The exchange rate of the euro against the Swiss franc plummeted rapidly. The exchange rate of the euro was temporarily below one franc. Parallel to this, the price of the US dollar also fell. While in Switzerland the abrupt lifting of the minimum price caused the stock market to collapse, European stock markets fluctuated but recovered quickly.
The price of gold, however, experienced a marked upswing as a result of these developments. The price of a fine ounce of gold rose by USD 35 to as much as USD 1264. One of the reasons for this was the fall in the value of the dollar: since gold is traded in the US currency, it became cheaper for investors to buy.
The Swiss franc coins are produced by Swissmint, a mint located in Bern.
The edge is smooth for 5, 10 and 20 centimes, but ribbed for ½, 1 and 2 francs. On the 5 franc coin, the edge is decorated with stars and the inscription “DOMINUS PROVIDEBIT”, a biblical quotation from the story of the sacrifice of Isaac, which translates as “The Lord will provide”. All Swiss coins bear the national designation “Confoederatio Helvetica” or “Helvetia”.
The oldest coin still in use today is the 10-centime coin from 1879, which is still produced with the same alloy and the same motif. In all other coins from 50 centimes upwards, the silver alloy was replaced by cupronickel, because the silver alloy exceeded the face value.
Initially, the banknotes were issued by cantonal and commercial banks. In 1907, the Swiss National Bank (SNB) was granted the exclusive right to issue banknotes. The first series, based on foreign designs and supplemented by Swiss national emblems, immediately came into circulation. The second series, introduced in 1911, was based on domestic designs.
In the 1970s Orell Füssli’s Security Printing Department was commissioned to print all Swiss banknotes.
Under the current Swiss-Liechtenstein Currency Treaty Liechtenstein has no right to issue Swiss francs.
The current, ninth banknote series is regarded as the most forgery-proof in the world. It has up to 18 different security features. The paper is obtained from so-called liners, a by-product of cotton processing.
1000 franc note as the world’s “second most expensive note
The 1000 franc banknote has been in circulation since the first series was issued. After the 10,000 Brunei dollar note worth around 7400 francs, it is the next banknote with the highest purchasing power. In comparison, the highest euro banknote is EUR 500, the highest dollar banknote USD 100. It is interesting to note that the distribution of the 1000 franc note has been steadily increasing since 2004. Within 10 years, the number of “thousands” in circulation has increased from 20 to 38 million.
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