The Swiss franc (CHF) is the official currency of Switzerland and Liechtenstein. Bank notes are issued by the Swiss National Bank, while coins are issued by the federal Swissmint. Since most European countries have adopted the Euro, the Swiss franc is the only franc still used in Europe. It is divisible by 100, and the Swiss equivalent of cents are called Rappens (German) or centimes (French).
The Swiss franc was formally introduced in 1798. Prior to that, the Helvetic Republic (as Switzerland was known at the time) had about 860 distinct gold and silver coins in circulation, all with different names, values and denominations. These coins were minted by about 75 mints spread throughout the republic’s cantons, cities and abbeys. The Berne thaler, one of the coins in circulation, was used as the base for the new Swiss franc. The new franc was equal in value to 6.75 grams of .999 fine silver, or 1½ French francs. The Swiss franc was issued only until 1803, when the Helvetic Republic was reorganized into the Swiss Confederation, made up of a number of cantons, each of which issued its own currency based on the short-lived franc of the Helvetic Republic.
In the early decades of the Swiss Confederation only fifteen percent of the money in circulation was produced locally. However, there were more than 8000 coins and banknotes in use, most brought back from abroad by mercenaries. In 1848 the Swiss Federal Constitution empowered the government as the only entity authorized to issue currency in Switzerland. The Federal Coinage Act of 1850 reintroduced the Swiss franc at par with the French franc. Reppen coins were struck in copper and billon, while francs were minted with .900 fines silver. Subsequent changes in coin mintage saw the use of nickel and the reduction of silver fineness of the franc.
The Latin Monetary Union was formed in 1865 by Switzerland, France, Italy and Belgium in an agreement to set all their currencies at par with each other. The currencies, including the franc, were set to a silver standard of 4.5 grams of silver, equivalent to 0.29 grams of gold. The monetary union lasted until 1927, when it was abandoned, and the Swiss franc continued to adhere to the valuation until it was devalued by 30% in 1936 following the devaluations of the US dollar and other major currencies.
Bank notes began to be issued in 1907 by hand of the Swiss National Bank.
In 1945 Switzerland joined the Bretton Woods accord and pegged the franc to the US dollar at a rate of 4.3 francs to the dollar. This made one franc equivalent to 0.2 grams of gold. When Bretton Woods was eliminated in 1971 the franc was floated against gold and the US dollar took the place as the world’s reserve currency.
The Swiss franc has historically been a trusted currency for holding reserves and it has held its value against the Euro and the US dollar. The franc by law needed 40% in gold reserves backing it up. However, this law was scrapped in 2000. After the financial crisis of 2008 investors poured into the Swiss franc seeking safe havens. This caused the franc to rise against the Euro and the dollar and it even traded above the dollar for the first time in history. In 2011 the Swiss franc continued its meteoric rise in value against the dollar and the Euro as investors fled equity markets, pushing the franc up past US$1.30 in August, prompting the government to announce a devaluation. A floor of 1.20 francs per Euro. The franc promptly lost 10% of its value and is now viewed with skepticism by investors, as one of the last great safe haven fiat currencies of the world had been corrupted.
Modern history has seen the gold price in Swiss francs as low as 236.55 francs per ounce in 1973 and a high as.
- The principal gold coin produced in Switzerland was the Vreneli, minted from 1897 to 1936 and from 1947 to 1949 in 0.900 fine gold with gold content of 0.0933 and 0.1866 troy ounces.
- Switzerland holds 1,040 tonnes of gold reserves representing 16.4% of its foreign exchange reserves.
- The Swiss mint is Switzerland’s official mint. It currently issues the fiat currency circulating in Switzerland as well as commemorative .900 fine gold bullion francs.