Swiss Frank transfer rates

The Franc as an investment currency

The history of the franc

The Franc (CHF) is the fruit of a well-developed Swiss banking system that laid a foundation for the global economy, especially at times of social unrest and wars. The beginning of the Swiss franc dates back to the French reign and the Napoleonic wars. Since then, Switzerland has not suffered serious wars or other disasters. However, It was not until the 20th century that the Swiss Confederation decide to have a single banknote applicable to the entire country. Even in the 19th century, every canton circulated separate banknotes. The situation was different when it came to coins, which were manufactured by a single national mint and were made of silver until as late as 1967.


Reach of the Swiss currency

An interesting contemporary fact may be the territorial range of the Swiss franc, which includes not only the Confederation, but also Liechtenstein and part of Italy, which has an enclave in this Alpine country. It is also worth noting that some sport associations which are seated in Switzerland, such as football and volleyball associations, keep their settlements in francs, which is why the media sometimes report on fines being imposed in francs.


A crisis currency

Thanks to its flexible exchange rate maintained by the Swiss National Bank, the franc has avoided financial crises and has become the most stable currency in the world. Such a situation makes the CHF the most popular global investment currency. However, such stability has some adverse side effects, particularly for currency investors because they should not expect any spectacular and sudden gains, though they should also not be afraid of losses. It can also be noticed that so-called currency speculators try not to impede the Swiss banking system, as it provides a kind of a haven for them in the case of an unsuccessful move.


Crisis in the Eurozone

The reliability and stability of the Swiss franc became very clear at the time of the crisis. In the past, the franc turned out to be a “safe haven" for international investors many times, especially when a new day brought political or economic disasters. Since the introduction of the euro, the Swiss franc lost its importance as a diversification currency, mainly due to the appearance of the quality of a new currency based on the strong and stable economies of the Western Europe. Only after the crisis swept the Eurozone and the problems in the U.S. were officially communicated – significant growth of the debt level and very large public debt actually exceeding 100% of the GDP, did the Swiss franc become a sought after currency for international investors.

Such a situation caused the value of the Swiss franc to rise significantly, exceeding 30% of the value in relation to the euro. This was not very favourable for the economy, which made the Swiss National Bank try different measures to stop the overappreciated value of the Swiss franc. The baseline interest rate was then decreased and stabilisation of the franc was ensured at a relation of 1.20 CHF per euro.


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