Why Is the Swiss Franc a Safe Haven?
In nervous times, investors pile into a handful of “safe-haven” currencies — and the Swiss franc is near the top of the list. Why does a small country’s money become the world’s bolt-hole?
Stability, stability, stability
Switzerland has a long record of political neutrality, low debt, low inflation and a strong, independent central bank. That reputation for not springing nasty surprises is exactly what frightened money wants.
Sound finances
A large current-account surplus and deep, trusted financial institutions mean the franc is backed by real economic strength, not promises. Investors trust it to hold value through a storm.
The downside of popularity
Safe-haven demand can push the franc so high it hurts Swiss exporters — which is why the Swiss National Bank has, at times, acted to weaken it. It also makes Switzerland famously expensive; see just how much in our USA vs Switzerland comparison.
Related havens
The franc shares its status with the US dollar and Japanese yen — see why the dollar is so strong. Track the franc against any currency on our USD to CHF page.