Swiss Franc

Name of currency: Swiss franc

Country / countries used: Switzerland, Leichtenstein, Campione d’Italia

Symbol: CHF

Brief history:

 In 1850, there were at least 8000 different coins and bank notes circulating in Switzerland. Of that, only 15% were locally produced, and the rest were mostly brought in by mercenaries. This made the monetary system extremely complicated and difficult to use. The Swiss Federal Constitution of 1848 provided a solution, stating that only the Federal Government could make money in Switzerland. In 1850 the Federal Coinage Act introduced the franc as the monetary unit in Switzerland.

1865 brought more change for the Swiss monetary system. That year, France, Belgium, Italy and Switzerland formed the Latin Monetary Union in which the value of their national currencies was set to a standard of 4.5 grams of silver. The Swiss franc remained on that standard until 1936 despite the monetary union dissolving in 1927. The reason for the Swiss change was the Great Depression, which caused a devaluation of 30%.

After the depression and the end of WWII, Switzerland joined the Bretton Woods system which hung the franc to the U.S. dollar at foreign exchange rates of $1 to 4.30521 francs. In 1949 this changed again to $1 to 4.375 francs.

Historically, the Swiss franc has been considered a safe-haven currency because it has virtually no inflation and a legal requirement that a minimum of 40% be backed by gold reserves. However, on 1st  May 2000, the link to gold was terminated and the Swiss started to sell their gold. In March of 2005, the Swiss National Bank had 1,290 tonnes of gold in reserves which equated to 20% of its overall assets. This idea of a safe-haven currency changed in 2011 when the Swiss National Bank set a minimum exchange rate of 1.20 francs to the euro because they believed that the franc’s value was becoming a threat to the economy. The response stunned currency traders because, in fifteen minutes, the franc fell to both the euro and the U.S. Dollar.

Swiss coins are broken down into rappens, of which 100 constitute a franc. There are 5, 10, 20 and 50 rappen pieces and then 1, 2, and 5 franc pieces. As for bank notes, there are 10, 20, 50, 100, 200 and 1000 franc notes. All Swiss coins are language neutral due to Switzerland’s four national languages.

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