Swiss franc

2008/9 Schools Wikipedia Selection. Related subjects: Currency

Swiss franc Schweizer Franken (German) Franc suisse (French) Franco svizzero (Italian) Franc svizzer (Romansh)
Image:1francosvizzero1983front.jpg 10 francs 1 franc
ISO 4217 Code	CHF
User(s)	Switzerland  Liechtenstein
Inflation	1.2% (Switzerland only)
Source	The World Factbook, 2006 est.
Subunit
1/100	Rappen (German) centime (French) centesimo (Italian) rap (Romansh)
Symbol	CHF, Fr., SFr. (old)
Nickname	Stutz, Stei, Eier ( Swiss), balle(s) (≥1 CHF) (French)
Plural	Franken (German) francs (French) franchi (Italian) francs (Romansh)
Rappen (German) centime (French) centesimo (Italian) rap (Romansh)	Rappen (German) centimes (French) centesimi (Italian) raps (Romansh)
Coins
Freq. used	5, 10, 20 centimes, 1/2, 1, 2, 5 francs
Rarely used	1 centime (no longer legal tender as of 01.01.2007)
Banknotes	10, 20, 50, 100, 200, 1000 francs
Central bank	Swiss National Bank
Website	www.snb.ch
Printer	Orell Füssli Arts Graphiques SA (Zürich)
Mint	Swissmint
Website	www.swissmint.ch

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 Büsingen 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, Neuchâtel gulden, St. Gallen thaler, Schwyz gulden, Solothurn thaler, Valais thaler, Zug schilling and Zürich 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 6¾ grams pure silver or 1½ 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, Graubünden frank, Luzern frank, St. Gallen frank, Schaffhausen frank, Schwyz frank, Solothurn frank, Thurgau frank, Ticino franco, Unterwalden frank, Uri frank, Vaud franc and Zürich 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.

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 1½ 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. 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.

CHF vs Euro (top) and U.S. Dollar (bottom) from June 2003 to 2006. CHF/EUR relatively stable compared to CHF/USD

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. Since mid-2006, the Swiss franc has been depreciating against euro.

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. 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.

Coins

First franc

Between 1798 and 1803, billon coins were issued in denominations of 1 rappen, ½ and 1 batzen. Silver coins were issued for 5, 10, 20 and 40 batzen, with the 40 batzen also issued with the denomination given as 4 francs. Gold 16 and 32 franc coins were issued in 1800.

Second franc

In 1850, coins were introduced in denominations of 1, 2, 5, 10 and 20 centimes, ½, 1, 2 and 5 francs, with the 1 and 2 centimes struck in bronze, the 5, 10 and 20 centimes in billon and the franc denominations in .900 fineness silver. Between 1860 and 1863, .800 fineness silver was used before the standard used in France of .835 fineness was adopted for all silver coins except the 5 francs (remained .900 fineness) in 1875. In 1879, billon was replaced by cupro-nickel in the 5 and 10 centimes and by nickel in the 20 centimes . In 1883, gold 20 francs coins were introduced, followed by 10 francs in 1911. Gold was struck for circulation until 1935.

Both world wars only had a small effect on the Swiss coinage, with brass and zinc coins temporarily being issued. In 1931, the size of the 5 francs coin was reduced from 25 grams to 15, with the silver content reduced to .835 fineness. The next year, nickel replaced cupro-nickel in the 5 and 10 centimes. Cupro-nickel was restored to these denominations in 1940, following the switch to cupro-nickel 20 centimes in 1939.

In the late 1960s, due to linkage to the devaluing U.S. dollar, the prices of internationally traded commodities rose significantly. A silver coin's material value exceeded its monetary value, and many were being sent abroad for melting, which prompted the federal government to make this practice illegal. The statute was of little effect, and the melting of francs only subsided when the collectible value of the remaining francs again exceeded their material value. In 1968, cupro-nickel replaced silver in all four denominations. The 2 centimes coin was discontinued in 1974, with aluminium-brass replacing cupro-nickel in the 5 centimes.

The 1 centime coin was still produced until 2006, albeit in ever decreasing quantities, but it didn't play any great role in the monetary economy in the fourth quarter of the twentieth century. People and groups who could justify the use of 1 centime coins for monetary purposes could obtain them at face value; any other user (such as collectors) had to pay an additional 4 centimes per coin to cover the production costs, which had exceeded the actual face value of the coin for many years. The coin fell into disuse in the late 1970s and early 1980s but only officially was fully withdrawn from circulation and declared not legal tender as of 01.01.2007. The long forgotten 2 centime coin was withdrawn in the early eighties. The 5 centime coin remains in use, in circulation and still legal tender for the time being notwithstanding the production cost of 11 centimes per coin. One of the main reasons why the Confederation can not allow the elimination of this coin, is pricing of goods and services as well as and possibly more due to the fact that a second class stamp costs 85 centimes at present. Swiss Post are looking into the possibility of a price rise or the elimination of the second class service which could ultimately pave the way for the elimination of the 5 centime coin therewith.

The designs of the coins have changed very little since 1879. Among the notable changes were new designs for the 5 francs in 1888, 1922, 1924 (minor) and 1931 (mostly just a size reduction). A new design for the bronze coins was used from 1948. Coins depicting a ring of stars (such as the 1 franc coin seen beside this paragraph) were modified from 22 stars to 23 stars in 1983; since the stars represent the Swiss cantons, it was updated to represent the 1979 expansion of the Swiss federation, when Jura seceded from Bern and became the 23rd canton.

All Swiss coins are language-neutral (at least with respect to Switzerland's four national languages), featuring only numerals, the abbreviation "Fr." for franc, and the Latin phrases "Helvetia" or "Confœderatio Helvetica" (depending on the denomination).

In addition to these general circulation coins, numerous series of commemorative coins have been issued, as well as gold coins including the well-known Vreneli. These coins generally remain legal tender, but are not used as such because their material or collector's value usually exceeds their face value.

Currency in circulation

As of December 2005, the total value of released Swiss coins and banknotes was 43,834.99 million Swiss francs.

Combinations of up to 100 usual Swiss coins (not including special or commemorative coins) are legal tender; banknotes are legal tender for any amount.

The Swiss franc

The franc as an international reserve currency