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The History of the Swiss Franc

When you’re dealing with Switzerland, Mr. Allon, is’s best to keep one thing in mind. It’s a business, and it’s run like a business. It’s a business that is constantly in a defensive posture. It’s been that way for seven hundred years.
—- Daniel Silva, The English Assassin

 

The following graph shows the very long-term FX rate between the dollar and the Swiss franc (blue line) and on the other side the living costs in the U.S as expressed by the CPI (red line). Obviously the value of the dollar started its descent at the moment then the Fed was created. The Swiss Franc, however, showed a stability that is only comparable to gold.

LongTerm Dollar CHF

The following overview indicates the most important monetary events.

source The Economist

 

Click for the following chapters:

1860-1971: The Swiss Franc during the Gold Standard and Bretton Woods

Since the 1950s: The long-term view on the Swiss franc and the correlation to gold

1971-1996 History wrap-up: From the end of Bretton Woods until the Swiss real estate crisis

1970s: Due to US Stagflation CHF Strengthens Massively

1978-1979: Volcker’s Attack on Stagflation 

1978: The Volcker Moment and the First Cap on CHF 

1978-1983: Volcker’s defeat of inflation strengthens dollar, weakens Swiss franc and gold

1980s: The Volcker Shock, the oil glut and the breakdown of gold and Emerging Markets

1986-1996: Swiss real estate Boom and Bust

1996-2004: Weak German and Swiss growth

2000-2007: The sale of Swiss gold reserves

2004 to 2009: Global Carry Trade and the undervalued franc

2008-2011: The Financial Crisis and the SNB Interventions

2012:The Swiss Franc becomes a “safe” Risk-On currency 

 

The following two chapters give more background about the 1970s:

1970s: “Cost-Push Inflation” Myth and the 1970s Stagflation

1970s: “Cost-Push Inflation” Myth: detailed event chain that prove that Arabs only reacted to the dollar depreciation

 

George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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