Hisotry of the Swiss Franc -- Major Traded Currencies

The franc (ISO 4217: CHF or 756) is the currency and legal tender of Switzerland and Liechtenstein. The Italian exclave Campione d'Italia and the German exclave Basingen also use the Swiss franc. Franc banknotes are issued by the central bank of Switzerland, the Swiss National Bank, while coins are issued by the federal mint, Swissmint.

The Swiss franc is the only version of the franc still issued in Europe. Its name in the four official languages of Switzerland is Franken (German), franc (French and Rhaeto-Romanic), and franco (Italian). The smaller denomination, which is worth a hundredth of a franc, is called Rappen (Rp.) in German, centime (c.) in French, centesimo (ct.) in Italian and rap (rp.) in Rhaeto-Romanic. The official ISO code of the currency used by banks and financial institutions is CHF, though most users of the currency, including advertisers, and stores generally use the Fr. abbreviation. Some users also write SFr.. CHF stands for Confoederatio Helvetica franc. Latin is used as the neutral representation of the country because the people of Switzerland speak four national languages.

History

First franc, 1798-1803

Before 1798, about 75 entities were making coins in Switzerland, including the 25 cantons and half-cantons, 16 cities, and abbeys, resulting in about 860 different coins in circulation, with different values and denominations. See Basel thaler, Berne thaler, Fribourg gulden, Geneva thaler, Geneva genevoise, Luzern gulden, Neuchatel gulden, St. Gallen thaler, Schwyz gulden, Solothurn thaler, Valais thaler, Zug schilling and Zurich thaler.

In 1798, the Helvetic Republic introduced a currency based on the French franc, subdivided into 10 batzen or 100 rappen. The Swiss franc was equal to 6ž grams pure silver or French francs. This Franc was issued until the end of the Helvetic Republic but served as the model for the currencies of several cantons in the re-formed Swiss Confederacy. For these cantonal currencies, see Aargau frank, Appenzell frank, Basel frank, Berne frank, Fribourg frank, Geneva franc, Glarus frank, Graubanden frank, Luzern frank, St. Gallen frank, Schaffhausen frank, Schwyz frank, Solothurn frank, Thurgau frank, Ticino franco, Unterwalden frank, Uri frank, Vaud franc and Zurich frank.

Second franc, 1850-

Although 22 cantons and half-cantons issued coins between 1803 and 1850, less than 15% of the money in circulation in Switzerland in 1850 was locally produced, with the rest being foreign, mainly brought back by mercenaries. In addition, some private banks also started issuing the first banknotes, so that in total, at least 8000 different coins and notes were in circulation at that time, making the monetary system extremely complicated. ^[1] ^[2]

In order to solve this problem, the new Swiss Federal Constitution of 1848 specified that the Federal Government would be the only entity allowed to make money in Switzerland. This was followed two years later by the first Federal Coinage Act, passed by the Federal Assembly on 7 May 1850, which introduced the franc as the monetary unit of Switzerland. The franc was introduced at par with the French franc. It replaced the different currencies of the Swiss cantons, some of which had been using a franc (divided into 10 batzen and 100 rappen) which was worth 1˝ French francs.

In 1865, France, Belgium, Italy, and Switzerland formed the Latin Monetary Union, where they agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 grams of gold. Even after the monetary union faded away in the 1920s and officially ended in 1927, the Swiss franc remained on that standard until 1936, when it suffered its sole devaluation, on 27 September during the Great Depression. The currency was devalued by 30% following the devaluations of the British pound, U.S. dollar and French franc. ^[3] In 1945, Switzerland joined the Bretton Woods system and pegged the franc to the U.S. dollar at a rate of $1 = 4.30521 francs (equivalent to 1 franc = 0.206418 grams of gold). This was changed to $1 = 4.375 francs (1 franc = 0.203125 grams of gold) in 1949.

Between mid-2003 and mid-2006, its exchange rate with the euro had been stable at a value of about 1.55 CHF per euro, so that the Swiss Franc has risen and fallen in tandem with the euro against the U.S. dollar and other currencies. As of March 2008 the Swiss Franc traded above one U.S. dollar for the first time.

The Swiss franc has historically been considered a safe haven currency with virtually zero inflation and a legal requirement that a minimum 40% is backed by gold reserves. ^[4] However, this link to gold, which dates from the 1920s, was terminated on 1 May 2000 following a referendum regarding the Nazi gold affair with Swiss banks and an amendment to the Swiss Constitution.^[5]

Notes

Otto Paul Wenger, p. 49-50.
150 Years of Swiss coinage
Table of currency devaluations in the United States and Europe following the devaluation the pound in 1931, in Monetary History of Gold: volume 3 After the Gold Standard
Declaration of the Swiss Government, through the Federal Finance and Customs Department, and the National Bank of Switzerland regarding the purchase and sale of gold, in Monetary History of Gold: volume After the Gold Standard
Federal Law on Currency and Legal Tender to enter into force
150 Years of Swiss coinage: From silver to cupronickel, on the website of Swissmint.
Circulation coins: Technical data, on the website of Swissmint. Last accessed
Swiss National Bank, Monthly Statistical Bulletin January 2006, A2: Banknotes and coins in circulation. Berne, January 2006
Seventh banknote series.
The global value of 200 francs notes in circulation in 2000 (5120.0 million francs) is larger than the value of 500 notes in 1996 (3912.30), even when these figures are corrected for the global increase in total value of Swiss banknotes in circulation (+9%). Figures from the Monthly Statistical Bulletin of the Swiss National Bank, January 2006, Op cit
An overview of the security features, Swiss National Bank.
Eighth banknote series 1995, on the website of the Swiss National Bank.
National Bank remits Sfr 244,3 million to the Fund for Emergency Losses, press release of the Swiss National Bank
New banknotes project, on the website of the Swiss National Bank.
Art. 3 of the Swiss law on Monetary Unit and means of payment. German, French and Italian versions.

References

Bernard Lescaze, Une monnaie pour la Suisse. Hurter, 1999. ISBN 2-940031-83-5
Michel de Rivaz, The Swiss banknote: 1907-1997. Genoud, 1997. ISBN 2-88100-080-0
H.U. Wartenwiler, Swiss Coin Catalog 1798-2005, 2006. ISBN 3-905712-00-8
Otto Paul Wenger, Introduction la numismatique, Cahier du Credit Suisse, August 1978 (in French).
Swissmint, 150 Years of Swiss coinage: A brief historical discourse. Last accessed 2 March 2006.
Swissmint, Prugungen von Schweizer MĂźnzen ab 1850 Frappes des ces de monnaie suisses partir de 1850, 2000.
Krause, Chester L. and Clifford Mishler (1991). Standard Catalog of World Coins: 1801-1991, 18th ed., Krause Publications. ISBN 0-87341-150-1.
Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues, Colin R. Bruce II and Neil Shafer (editors), 7th ed., Krause Publications. ISBN 0-87341-207-9.

External links