REPRESENTED by the international code CHF, the Swiss Franc is the official currency of Switzerland, formally known as the Swiss Confederation and the Principality of Liechtenstein, it is one of the most actively traded currencies in the world owing to Switzerland’s strong economy, highly stable government, excellent financial services and systems as well as its ability to keep itself neutral and out of armed conflicts with other nations.
The Swiss Franc’s CHF currency code stands for Confoederatio Helvetica Franc and is the last remaining European currency that still uses the name Franc, although the codes SFr and Fr. are still commonly used particularly in Switzerland itself. Like most of the world’s currencies, the CHF follows the decimal system and is divided into units of 100 centesimo (Italian), Rappen (German) and Centime (French).
The CHF traditionally enjoys the status of being one of the most respected currencies in the market. Large companies, governments and institutions hold substantial amounts of CHF because of its well-earned perception of stability and wide acceptability.
During times of conflict and economic uncertainties, the CHF is seen as a currency safe haven. Until recently, the CHF was the only currency to be backed by actual and substantial gold reserves.
When the Swiss government sold the bulk of its gold holdings in the last decade, the CHF didn’t lose its luster as a strong currency reserve. Switzerland’s non gold reserves are more than four times as its gold reserves. Its economic fundamentals remain strong with or without its touted gold reserves.
As one of the richest and most progressive countries in the world with practically zero debt, Switzerland also has one of the best sound banking systems with an excellent track record of maintaining low inflation and current account surpluses. Its central bank, the Swiss National Bank, is also considered as one of the best in the world as it managed to keep the CHF very stable over the years.
CHF: A Story of Stability and Reliability
The CHF’s origins date back centuries ago when several local entities and member states of the Swiss Confederation came up with their own currency versions, issuing coins and note of various denominations, monetary systems and sizes. These efforts proved to be quite unsuccessful as the sheer number of currencies made the whole thing unwieldy and chaotic.
In 1798, the first attempt to institute a centralized currency was made by the Helvetica Republic. This new Franc’s value was equivalent to 1.5 French Francs or 6.75 grams of pure silver. Although this monetary unit lasted until 1803, this served as the prototype for the modern CHF as it was adopted by most confederation member states or cantons.
To standardize, eliminate confusion and to strengthen its economy, the Swiss Federal Constitution of 1848 gave the sole authority to issue, print, mint and circulate Swiss currency to the Swiss federal government. In 1850, the Swiss Franc was formally designated as the official currency of the Swiss Confederation with the passage of the Federal Coinage Law by the Federal parliament.
The new CHF’s value was pegged to the French franc on a 1 to 1 basis or equal value. The new Federal law eliminated the use of local or canton-issued currencies including those that were previously set at 1.5 SFr. to 1 French Franc.
When France, Switzerland and Italy standardized their currencies under the Latin Monetary Union in 1865, the CHF was set to a standard of 4.5 grams of silver or 0.290322 grams of gold. When the Union was dissolved in 1927, the CHF maintained the same standards until 1936 when it experienced its first and only devaluation, losing 30% of its value, as result of the Great Depression.
CHF Banknotes and Coins
Since then, the Swiss National Bank was able to successfully manage the CHF pricing through the years. The currency’s resilience and stability through various political and economic crises and even two global conflicts have cemented the CHF’s status as one of the world’s most reliable and rock-steady currency safe havens.
The Swiss National Bank is responsible for the printing and circulation of CHF banknotes since 1907. The current bank notes were issued in the following denominations: 10, 20, 50, 100, 200 and 1000 CHF. To prevent counterfeiting, each note has many distinct security features although not all were made public.
CHF coins have been issued since the early 19th century and much has changed from metallic composition to its inscriptions. The inscriptions on the CHF coins are written in Latin to make the currency language neutral as Switzerland is a quadrilingual nation. The current CHF coins are in the following denominations: 5 Rappen, 10 Rappen, 20 Rappen, 50 Rappen or half-Franc, 1 Franc, 2 Francs and 5 Francs.