Swiss National Bank

That's right, the Central Bank of Japan is their stock market's largest shareholder.

The Swiss Central Bank owns $90 billion in American stocks including Apple, Microsoft, Google and Amazon.

When I first heard of this a few years ago, I simply couldn't believe it was legal.

So these central banks are creating money out of nothing and they can't go bankrupt.

It's not only Western East because I can think of an economy of a country which would love to become more competitive and has been hell too much attractive on its currency is the Swiss francs.

What's the view of H2O on the Swiss francs? Would the Swiss National Bank increase its

rate? I mean, it's a good parallel to make with the yen because the Swiss franc looks like the yen on many, many dimensions.

Yeah.

And that's what matters to Switzerland.

Is

it only this impact of more competitivity and less attractiveness worked by the Swiss National Bank? Or is it also linked to carry traders that maybe look for a new foreign exchange for

financing? Yes, for sure.

And you mentioned that in your paper.

The Swiss National Bank also does it.

And some other countries had done it, but they've since left.

But those are the two, I think, best examples currently.

By the way, I want to clarify, I'm not expecting the Fed to be one of the early movers among central banks.

The ECB is moving hard on providing tokenized central bank deposits to its financial system.

The Swiss National Bank has already done that.

The Bank of England is figuring out how to do this with conventional reserves that are available on programmable ledgers.

We had a remarkable convergence of central bank activity across the globe.

and the pattern is both clear and complex the federal reserve held the european central bank held the reserve bank of new zealand and in a narrow vote which is important i unexpectedly kept its uh official cash rate at 2.75 percent and the bank of japan was expected to hold rates steady during its meeting and the swiss national bank was also expected to maintain its policy rate at zero percent five major central banks all pausing all within the same week that is an extraordinary moment in global monetary policy but here is what makes this moment genuinely interesting for macro investors Holding is not the same as done.

Every single one of these institutions is signaling in one way or another that the inflation fight is not finished.

The Fed described the economy as too strong to comfortably declare victory on inflation.

Currency volatility is likely to persist as rate expectations shift around the margins.

The euro's move to its lowest since May is one example, and in emerging markets, the global rate environment remains a headwind, particularly for countries with dollar-denominated debt.

The Swiss National Bank at zero and the Bank of Japan at expected steady levels represent the outliers in this picture.

Economies where the tightening cycle either never fully took hold or where structural factors kept policy exceptionally loose, those divergences create their own opportunities and risks in currency markets that are worth monitoring constantly.

So we know the Monetary Authority of Singapore only meets or at least only makes a decision four times a year.

The Swiss National Bank, similar as well.

So it doesn't necessarily deviate that much from international practice.

Okay.

And the Bank for International Settlements didn't actually store any of the gold.

It had an agreement with three central banks, the Bank of England, the Federal Reserve, and the Swiss Central Bank.

They had the actual gold.

So the Bank of England would store the gold.

They'd be like, right, can you make that Germany's now? And so every time Hitler invaded a country, the Bank for International Settlements would transfer the gold over to Germany.

But it wasn't a transfer.

It was just literally call the Bank of England, call the Federal Reserve, call the Swiss Central Bank, and change the label on those gold bars.

That's now Germany's.

Another very good example of that is what happened in 2015 with the Swiss franc against the euro.

Up until 2015, the Swiss National Bank had fixed its exchange rate of Swiss francs versus euro at a fixed rate.

And one day, without warning, the Swiss National Bank announced they were going to abandon the fixed rate.

On that day, the Swiss franc jumped by 30% against the euro and against most other currencies.

It just went straight up.

Let's start with the gold.

During the war, Germany's central bank, the Reichsbank, sent the Swiss National Bank gold worth about eight and a half billion dollars in today's money.

There were a couple problems with that, and one was where that gold originally came from.

A panel of historians appointed by the Swiss government in the 1990s, known as the Bergier Commission, estimated nearly three-quarters of that gold was looted, most of it from the central banks of countries Germany had conquered, like Belgium and the Netherlands.

Starting in 1942, the SS delivered valuables taken from people murdered in the concentration camps: wedding rings, watches, dental gold.

The Reichsbank melted down much of it and recast it into ordinary-looking bars.

Records show that at least 260 pounds of that ended up in the vaults of the Swiss National Bank, and my gut tells me a lot more.

Now, there's no evidence that Swiss bank leaders knew which bars held that gold.