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For reserves excluding gold, see List of countries by foreign-exchange reserves (excluding gold).

Foreign exchange reserves, also called Forex reserves, are, in a strict sense, only foreign-currency deposits held by nationals and monetary authorities. However, in popular usage and in the list below, it also includes gold reserves, special drawing rights (SDRs) and IMF reserve position because this total figure, which is usually more accurately termed as official reserves or international reserves or official international reserves, is more readily available and also arguably more meaningful.^{[citation needed]}

These foreign-currency deposits are the financial assets of the central banks and monetary authorities that are held in different reserve currencies (e.g. the U.S. Dollar, the Euro, the Japanese Yen, the Pound Sterling, and the Chinese Yuan) and which are used to back its liabilities (e.g. the local currency issued and the various bank reservesdeposited with the Central bank by the government or financial institutions). Before the end of the gold standard, gold was the preferred reserve currency. Some nations are converting foreign-exchange reserves into sovereign wealth funds, which can rival foreign-exchange reserves in size.^{[citation needed]}

List[edit]

The list below is mostly based on the latest available IMF data, and while most nations report in U.S. dollars, a few nations in Eastern Europe report solely in Euros and some others report in their respective currencies. And since all the figures below are in U.S dollar equivalents, exchange rate fluctuations can have a significant impact on these figures.

ZURICH, Dec 22 (Reuters) - The Swiss National Bank's foreign currency reserves shrank during the third quarter, data showed on Thursday, as weakening global stock and bond markets hit the central bank's forex investments.

Total reserve assets held by the central bank declined to billion Swiss francs ($ billion) at the end of September from billion francs at the end of June.

Most of the downturn was mainly due to the reduced value of stocks and bonds the SNB holds, although the Swiss franc's appreciation also lowered its value when converted into francs.

The data also showed that the SNB acquired a net billion francs of forex between July and the end of September.

The figure was a surprise as the central bank has been selling foreign currencies in recent months to maintain the high nominal value of the franc - an aid in its battle against resurgent inflation.

Still, economists said the data should not be seen as a direct indication of the SNB's interventions because the figures included interest and foreign exchange income from the bank's forex reserves.

"You can't infer the FX interventions based on this data because they are partial," said Credit Suisse economist Maxime Botteron, who estimates the SNB actually sold around billion francs from its forex reserves in the third quarter.

He said the foreign exchange transaction data, which the SNB is due to publish on Dec. 30, would give a better indication of its buying and selling of foreign currencies.

The SNB declined to comment.

The central bank also published data showing the Swiss current account surplus widening to billion Swiss francs ($ billion) from billion francs a year earlier.

The increase, based on a high surplus in the goods trade and a relative low deficit in services trade and primary income, was moderate because it lapped high comparisons with a year earlier, the SNB said.

($1 = Swiss franc)

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For security, individuals, large organizations, and even nations will keep some of their surplus reserves in gold and foreign currencies. The U.S. dollar remains the primary and most trusted reserve currency, but the Swiss franc has also emerged as one of the best alternatives. This article explores why the Swiss franc is a good investment.

High Security, Low Risk, and Protection From Inflation

Worldwide, investors look for better returns and security for their invested capital. While bonds are secure, they tend to provide lower returns. Stocks and other financial instruments offer higher returns but they come with greater risks. Inflation is another factor that lowers returns. Investors look for assets that provide a balance—protection from inflation, security from risk and potential for returns. Gold and the U.S. dollar have been traditional assets, but the Swiss franc has also emerged as a potential investment option because it qualifies on all three parameters.

The Development of the Swiss Franc as a Safe Investment

The following events supported the Swiss franc’s status as a safe and robust investment vehicle:

• Russia earns billions by selling oil and gas. So far, it has been keeping it securely in U.S. dollars, U.S. securities, and gold. However, sanctions imposed by the United States and the European Union on Russia caused the country to seek alternatives to U.S. dollars and securities. The decline in the Russian ruble has also driven Russian investors and businesses to search for safe currencies, and many chose the Swiss franc as a safe haven. 
• The multi-nation European debt crisis of to saw substantial fund flow from the affected European nations to Switzerland. Countries were basically aiming to secure their currency (euro) to the Swiss franc.
• The global financial crisis of , originating in the United States, also saw the transfer of funds from U.S. currency and securities to Swiss assets.

Why Is the Swiss Franc a Safe Investment?

• The geopolitical and economic ecosystem: Switzerland has a strong economic system that is comfortable with a limited yet realistic growth rate with controlled requirements. The advantage for Switzerland lies in its size. It is a small country with a limited population. In addition, appropriate exploitation of available natural resources and limited investments in production and agriculture required to support stable ongoing economic growth are the key factors of a stable Swiss economy and Swiss franc. Switzerland is the sixth-largest creditor to the United States as of December , which is evidence of its stable financial position.
• No deficit: Switzerland’s income exceeds its expenses, so there is no deficit. This makes it self-reliant and stabilizes its currency. Also, the economy has no plans for any large investments. 
• An alternative to gold: Inflation is a key reason investors choose gold. Gold is used as a  reserve across the globe by various nations because it is perceived to be a good hedge for inflation. A quick check on historical inflation in Switzerland indicates relative stability, which has led to huge investments in the Swiss franc.

Graph Courtesy: eunic-brussels.eu

• Independent Monetary Policy: The Swiss franc is not backed by gold. The Swiss National Bank (SNB) can print any amount of currency without any need for a reserve. Effectively, it is a form of quantitative easing (QE), which enables a central bank to independently control the currency rate. For instance, the European debt crisis led to a high demand for Swiss francs from the eurozone countries, which sent the Swiss franc valuation to higher limits. It made Swiss exports costly, and the franc's high valuation posed a danger to the Swiss economy. The Swiss National Bank pegged the rate of the Swiss franc to euros and mitigated the effects of high demand for Swiss francs. In doing so, the Swiss National Bank declared, “The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.” Banks like UBS imposed a fee for large institutional investors who maintained a large amount of deposits in their accounts. These measures discouraged the rampant buying of Swiss francs and stabilized the Swiss economy. However, since the euro was pegged to franc at a fixed rate, its decline against other currencies in led to the depreciation of the Swiss franc. Again, a timely reverse action by the Swiss National Bank on January 15, , to remove the fixed price peg against the euro ensured that Swiss franc retained its stability.
• Small Debt Market: The small size of the Swiss debt market adds to its economic advantage. If a large economy, such as Russia or Germany, placed its huge reserves in Swiss debt, it could effectively take control of Swiss debt. Due to the small market and no requirement for foreign funds by Switzerland, because it has no deficit, such buy-ins are impossible. This shields the Swiss economy and helps keep the Swiss franc valuation stable.
• Other factors: With strong GDP, no budget deficit, low unemployment, significant economic contribution by the financial services sector, high per capita income and as a destination for funds through secret bank accounts, the Swiss franc remains safe investment.

The Bottom Line

The Swiss franc has been popular among investors looking for a safe haven for their money. It is apparent that the Swiss economy is unlikely to move from its low-debt, low-growth ideology and will continue to remain a major banking destination. The fundamentals back the Swiss franc as a safe and stable investment for years to come.

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ZURICH, Dec 30 (Reuters) - The Swiss National Bank increased its forex sales to million Swiss francs ($ million) during the third quarter of , the central bank said on Friday, showing how its focus has switched from stemming the safe-haven currency's strength to fighting inflation.

The figure was an acceleration from the 5 million francs in foreign currencies the SNB sold during the second quarter of , and continues its changed approach after buying billion francs of forex since

The SNB has instead recently been selling foreign currencies to strengthen the Swiss franc, whose high value has helped dampen inflation caused by more expensive imports.

Swiss inflation stood at 3% in November, low in comparison to other countries, but high in Swiss terms and outside the SNB's goal for inflation of %.

SNB Chairman Thomas Jordan said earlier this month the central bank had sold foreign currencies in recent months to ensure "appropriate monetary conditions."

He said the bank would also sell foreign currencies in future, while the SNB also remained willing to buy foreign currencies again if necessary to check excessive appreciation of the franc.

Credit Suisse economist Maxime Botteron said he expected the SNB to have continued selling foreign currencies in the fourth quarter, estimating the central bank sold billion francs of currencies in October alone.

"I expect forex sales to continue if Swiss inflation is above target. Mr. Jordan has said there is no target for them to raise the franc to, but the interventions are intended to prevent the franc weakening too much as this helps against imported inflation," Botteron said.

"Foreign currency sales probably increased during the fourth quarter too, after the SNB raised its interest rates in September. Before then FX sales were not necessary as the CHF appreciated sharply over the summer," he said.

($1 = Swiss francs)

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