The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also
legal tender in the Italian exclave Campione d'Italia. The Swiss National Bank issues banknotes
and the federal mint Swissmint issues coins. The Swiss franc is the only version of the
franc still issued in Europe. The smaller denomination, a hundredth of a franc, is a
Rappen in German, centime in French, centesimo in Italian, and rap in Romansh. The ISO code
of the currency used by banks and financial institutions is CHF, although "Fr." is used
by most businesses and advertisers; some use SFr.; the Latinate "CH" stands for Confoederatio
Helvetica. Given the different languages used in Switzerland,
Latin is used for language-neutral inscriptions on the coins.
History Before the Helvetic Republic
Before 1798, about 75 entities were making coins in Switzerland, including the 25 cantons
and half-cantons, 16 cities, and abbeys, resulting in about 860 different coins in circulation,
with different values, denominations and monetary systems.
The local Swiss currencies included the Basel thaler, Berne thaler, Fribourg gulden, Geneva
thaler, Geneva genevoise, Luzern gulden, Neuchâtel gulden, St. Gallen thaler, Schwyz gulden,
Solothurn thaler, Valais thaler and the Zürich thaler.
Franc of the Helvetic Republic, 1798–1803 In 1798, the Helvetic Republic introduced
a currency based on the Berne thaler, subdivided into 10 batzen or 100 centimes. The Swiss
franc was equal to 6¾ grams pure silver or 1½ French francs.
This franc was issued until the end of the Helvetic Republic in 1803, but served as the
model for the currencies of several cantons in the re-formed Swiss Confederacy. For these
cantonal currencies, see Aargau frank, Appenzell frank, Basel frank, Berne frank, Fribourg
frank, Geneva franc, Glarus frank, Graubünden frank, Luzern frank, St. Gallen frank, Schaffhausen
frank, Schwyz frank, Solothurn frank, Thurgau frank, Ticino franco, Unterwalden frank, Uri
frank, Vaud franc and Zürich frank. Franc of the Swiss confederation, 1850–
Although 22 cantons and half-cantons issued coins between 1803 and 1850, less than 15%
of the money in circulation in Switzerland in 1850 was locally produced, with the rest
being foreign, mainly brought back by mercenaries. In addition, some private banks also started
issuing the first banknotes, so that in total, at least 8000 different coins and notes were
in circulation at that time, making the monetary system extremely complicated.
In order to solve this problem, the new Swiss Federal Constitution of 1848 specified that
the Federal Government would be the only entity allowed to make money in Switzerland. This
was followed two years later by the first Federal Coinage Act, passed by the Federal
Assembly on 7 May 1850, which introduced the franc as the monetary unit of Switzerland.
The franc was introduced at par with the French franc. It replaced the different currencies
of the Swiss cantons, some of which had been using a franc which was worth 1½ French francs.
In 1865, France, Belgium, Italy, and Switzerland formed the Latin Monetary Union, wherein they
agreed to value their national currencies to a standard of 4.5 grams of silver or 0.290322 grams
of gold. Even after the monetary union faded away in the 1920s and officially ended in
1927, the Swiss franc remained on that standard until 1936, when it suffered its sole devaluation,
on 27 September during the Great Depression. The currency was devalued by 30% following
the devaluations of the British pound, U.S. dollar and French franc. In 1945, Switzerland
joined the Bretton Woods system and pegged the franc to the U.S. dollar at a rate of
$1 = 4.30521 francs. This was changed to $1 = 4.375 francs in 1949.
The Swiss franc has historically been considered a safe-haven currency with virtually zero
inflation and a legal requirement that a minimum of 40% be backed by gold reserves. However,
this link to gold, which dates from the 1920s, was terminated on 1 May 2000 following a referendum.
By March 2005, following a gold selling program, the Swiss National Bank held 1,290 tonnes
of gold in reserves which equated to 20% of its assets.
2011 appreciation In March 2011 the franc climbed past the US$1.10
mark. In June 2011 the franc climbed past US$1.20 as investors sought safety amidst
the continuation of the Greek sovereign-debt crisis. Continuation of the same crisis in
Europe and the debt crisis in the U.S. propelled the Swiss franc past US$1.30 as of August
2011, prompting the Swiss National Bank to boost the franc's liquidity in an attempt
to counter its "massive overvaluation". The Economist argued that its Big Mac Index in
July 2011 indicated an overvaluation of 98% over the dollar and cited Swiss companies
releasing profit warnings and threatening to move operations out of the country due
to the strength of the franc. Demand for francs and franc-denominated assets was so strong
that nominal short-term Swiss interest rates became negative.
On 6 September 2011 the SNB set a minimum exchange rate of 1.20 francs to the euro saying
"the value of the franc is a threat to the economy", and that it was "prepared to buy
foreign currency in unlimited quantities." In response to the announcement the franc
fell against the euro, to 1.22 francs from 1.12 francs and lost 9% against the U.S. dollar
within fifteen minutes. The intervention stunned currency traders since the franc had long
been regarded as a safe haven. The franc fell 8.8% against the euro, 9.5%
against the dollar, and at least 8.2% against all 16 of the most active currencies on the
day of the announcement. It was the largest plunge of the franc ever against the euro.
The SNB had previously set an exchange rate target in 1978 against the Deutsche Mark and
maintained it, although at the cost of high inflation. As of June 2014, the franc continues
to trade below the target level set by the SNB, though the ceiling was broken at least
once on 5 April 2012, albeit briefly. Coins
Coins of the Helvetic Republic
Between 1798 and 1803, billon coins were issued in denominations of 1 centimes, ½ batzen,
and 1 batzen. Silver coins were issued for 10, 20 and 40 batzen, with the 40 batzen coin
also issued with the denomination given as 4 francs. Gold 16 and 32 franc coins were
issued in 1800. Coins of the Swiss Confederation
In 1850, coins were introduced in denominations of 1, 2, 5, 10, and 20 centimes and ½, 1,
2, and 5 francs, with the 1 and 2 centimes struck in bronze, the 5, 10, and 20 centimes
in billon, and the franc denominations in .900 fine silver. Between 1860 and 1863, .800
fine silver was used, before the standard used in France of .835 fineness was adopted
for all silver coins except the 5 francs in 1875. In 1879, billon was replaced by cupro-nickel
in the 5 and 10 centimes and by nickel in the 20 centimes.
Both world wars only had a small effect on the Swiss coinage, with brass and zinc coins
temporarily being issued. In 1931, the size of the 5 franc coin was reduced from 25 grams
to 15, with the silver content reduced to .835 fineness. The next year, nickel replaced
cupro-nickel in the 5 and 10 centimes. In the late 1960s, due to their linkage to
the devaluing U.S. dollar, the prices of internationally traded commodities rose significantly. A silver
coin's material value exceeded its monetary value, and many were being sent abroad for
melting, which prompted the federal government to make this practice illegal. The statute
was of little effect, and the melting of francs only subsided when the collectible value of
the remaining francs again exceeded their material value.
The 1 centimes coin was still produced until 2006, albeit in ever decreasing quantities,
but it did not play any great role in the monetary economy in the fourth quarter of
the twentieth century. People and groups who could justify the use of 1 centimes coins
for monetary purposes could obtain them at face value; any other user had to pay an additional
4 centimes per coin to cover the production costs, which had exceeded the actual face
value of the coin for many years. The coin fell into disuse in the late 1970s and early
1980s but was only officially fully withdrawn from circulation and declared to be no longer
legal tender as of 1 January 2007. The long-forgotten 2 centimes coin, not minted since 1974, was
demonetized 1 January 1978.
The designs of the coins have changed very little since 1879. Among the notable changes
were new designs for the 5 franc coins in 1888, 1922, 1924 and 1931. A new design for
the bronze coins was used from 1948. Coins depicting a ring of stars were modified from
22 stars to 23 stars in 1983; since the stars represent the Swiss cantons, it was updated
to represent the 1979 expansion of the Swiss federation, when Jura seceded from the Canton
of Bern and became the 23rd canton.
The 10 centimes coins from 1879 onwards have had the same composition, size and design
until now and are still legal tender and found in circulation.
All Swiss coins are language-neutral, featuring only numerals, the abbreviation "Fr." for
franc, and the Latin phrases "Helvetia", "Confœderatio Helvetica" or the inscription "Libertas" on
the small coins. The name of the artist is present on the coins with the standing Helvetia
and the herder. In addition to these general circulation coins,
numerous series of commemorative coins have been issued, as well as silver and gold coins.
These coins are no longer legal tender, but can be exchanged for face value at post offices,
and at national and cantonal banks. Their material or collector's value equals or exceeds
their face value. Banknotes
In 1907, the Swiss National Bank took over the issuance of banknotes from the cantons
and various banks. It introduced denominations of 50, 100, 500 and 1000 francs. 20 franc
notes were introduced in 1911, followed by 5 franc notes in 1913. In 1914, the Federal
Treasury issued paper money in denominations of 5, 10 and 20 francs. These notes were issued
in three different versions: French, German and Italian. The State Loan Bank also issued
25 franc notes that year. In 1952, the National Bank ceased issuing 5 franc notes but introduced
10 franc notes in 1955. In 1996, 200 franc notes were introduced whilst the 500 franc
note was discontinued. Eight series of banknotes have been printed
by the National Bank, six of which have been released for use by the general public. The
sixth series from 1976, designed by Ernst and Ursula Hiestand (de), depicted persons
from the world of science. It has been recalled and replaced and will lose any value on 1
May 2020. As of 2010, a large number of notes from this series have not yet been exchanged,
even though they have not been legal tender for more than 10 years; for example, the value
of those 500 franc banknotes still in circulation represents 129.9 million Swiss francs.
The seventh series was printed in 1984, but kept as a "reserve series", ready to be used
if, for example, wide counterfeiting of the current series suddenly happened. When the
Swiss National Bank decided to develop new security features and to abandon the concept
of a reserve series, the details of the seventh series were released and the printed notes
were destroyed. The current, eighth series of banknotes was
designed by Jörg Zintzmeyer (de) around the theme of the arts and released starting
in 1995. In addition to its new vertical design, this series was different from the previous
one on several counts. Probably the most important difference from a practical point of view
was that the seldom-used 500 franc note was replaced by a new 200 franc note; this new
note has indeed proved more successful than the old 500 franc note. The base colours of
the new notes were kept similar to the old ones, except that the 20 franc note was changed
from blue to red to prevent a frequent confusion with the 100 franc note, and that the 10 franc
note was changed from red to yellow. The size of the notes was changed as well, with all
notes from the 8th series having the same height, while the widths were changed as well,
still increasing with the value of the notes. The new series contains many more security
features than the previous one; many of them are now visibly displayed and have been widely
advertised, in contrast with the previous series for which most of the features were
kept secret. All banknotes are quadrilingual, displaying
all information in the four national languages. The banknotes depicting a Germanophone person
have German and Romansch on the same side as the picture, whereas banknotes depicting
a Francophone or an Italophone person have French and Italian on the same side as the
picture. The reverse has the other two languages. When the 5th series lost its validity at the
end of April 2000, the banknotes that had not been exchanged represented a total value
of 244.3 million Swiss francs; in accordance with Swiss law, this amount was transferred
to the Swiss Fund for Emergency Losses in the case of non-insurable natural disasters.
In February 2005, a competition was announced for the design of the 9th series, planned
to be released around 2010 on the theme Switzerland open to the world. The results were announced
in November 2005, but the selected design drew widespread criticisms from the population.
As a result, the release date has been repeatedly postponed. In February 2010, it was announced
that the release would take place in 2012, and in December 2012 the date was given as
"2015 at the earliest". Circulation
The Swiss franc is the currency and legal tender of Switzerland and Liechtenstein; it
is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal
tender in the German exclave Büsingen, it is in wide daily use there.
As of March 2010, the total value of released Swiss coins and banknotes was 49,664.0 million
Swiss francs. Combinations of up to 100 circulating Swiss
coins are legal tender; banknotes are legal tender for any amount.
Reserve currency The Swiss franc is used as a reserve currency
around the world and is currently ranked rarely 5th or 6th in value held as reserves after
the United States dollar, the euro, the Japanese yen, the pound sterling and the Australian
dollar.
Current exchange rates See also
Banking in Switzerland Economy of Switzerland
Hard currency Iraqi Swiss dinar, a common name for the old
Iraqi currency but not related to Swiss currency. Liechtenstein frank
Notes and references
Bibliography
External links (German) CashFollow.ch, Swiss Franc Tracker
(German) Schweizer-Franken.ch, Information about the Swiss Franc
Colnect.com, Swiss banknotes catalog