Abstract :
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- The independence of the Swiss National Bank (SNB) is a key pillar of Swiss monetary stability, protected by a unique legal framework and tight governance.
- Compared to other major central banks, the SNB stands out for its ability to pursue an autonomous monetary policy tailored to Switzerland’s specific circumstances, while remaining accountable to democratic institutions.
- However, this independence is the subject of recurring debates (governance, climate, use of profits), highlighting the need to preserve its autonomy in the face of growing political pressure.
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The independence of the Swiss National Bank (SNB) is often presented as a pillar of the country’s monetary stability. In Switzerland, the central bank enjoys a special legal status that protects it from direct political pressure, while holding it accountable for its actions. In the current context, where major central banks such as the European Central Bank (ECB), the US Federal Reserve (Fed), and the Bank of Japan (BoJ) also operate under regimes of independence, it is instructive to compare the situation of the SNB.
This comparison will be made at the macroeconomic, institutional, and monetary policy levels in order to rigorously situate the SNB’s independence within the political, legal, and economic framework of modern Switzerland. The aim is to adopt an academic and factual approach, neither militant nor partisan, drawing on experts on the governance and effectiveness of the SNB.
Central bank independence: foundations and importance
The idea that central banks should be independent is now widely accepted, but this is a relatively recent development in monetary history. After World War II, and especially from the 1980s and 1990s onwards, many countries strengthened the autonomy of their central banks in order to protect the fight against inflation. An independent central bank can pursue a monetary policy focused on price stability without being subject to short-term electoral pressures that could lead to inflationary measures (such as excessive money creation to finance public deficits or artificially stimulate the economy before an election).
Numerous empirical studies have shown that a higher degree of legal independence for the central bank correlates with lower inflation in the long term, all other things being equal. Conversely, periods when monetary policy has been subject to government imperatives have often resulted in episodes of inflation or macroeconomic imbalances.
It should be emphasized that independence is not an end in itself, but a means to economic prosperity and the public good. As expressed by T. Jordan, former president of the SNB, the independence of a central bank « is indispensable as a means of fulfilling its mandate […] in the general interest of society. » In other words, the central bank is not independent for its own institutional benefit, but to better achieve its objectives, particularly monetary stability, for the benefit of the community. This independence must therefore be accompanied by increased accountability: the central bank mustearnthe trust placed in it by being accountable for its actions and demonstrating transparency. It is a delicate balance between decision-making autonomy and democratic legitimacy.
Comparison with other central banks
To better understand the specific features of the Swiss National Bank’s (SNB) independence, it is useful to compare it with other major central banks—the ECB, the Fed, and the BoJ—in legal, institutional, and operational terms.
The ECB has the most protective framework, with its independence enshrined in European treaties, prohibiting any political interference. The Fed, although created by Congress and theoretically reformable, enjoys broad autonomy in practice, reinforced by tradition and the absence of day-to-day intervention by the legislature. Although the BoJ became officially independent in 1998, it has had to defend its status on occasion in recent years in the face of political pressure. The SNB stands out for its unique constitutional protection and a national law (NBA) that explicitly prohibits it from receiving external instructions, making it one of the most legally autonomous central banks.
Their mandates also differ. The ECB focuses exclusively on price stability (2% symmetric inflation), the Fed pursues a dual mandate of controlled inflation and full employment, and the BoJ, while targeting 2% inflation, also incorporates financial stability. The SNB, for its part, must ensure price stability while taking economic conditions into account, which brings its mandate closer to that of the ECB, with a flexibility more akin to that of the Fed. Since 2000, it has defined stability as inflation below 2%, without adopting a formal « target. »
In terms of governance, the SNB stands out with a small board of three members, compared to the larger structures of the Fed (FOMC with 12 votes) and the ECB (Governing Council comprising six executive members and national governors). The BoJ has a nine-member Monetary Policy Board. Although all are subject to political influence during appointments, the SNB has a limited mandate that restricts interference once leaders are appointed, unlike the Fed, which is subject to ongoing political pressure on its dual mandate.
Since 2008, all have experimented with unconventional policies. The Fed and the ECB have bought up assets on a massive scale to support their economies, sometimes drawing criticism for their implicit role in supporting public finances. The BoJ has been even more interventionist, going so far as to control long-term interest rates and becoming the main holder of Japanese public debt. The SNB, faced with the appreciation of the franc, pursued its own exceptional policy: a floor rate between 2011 and 2015, then negative rates and interventions in the currency market. Its balance sheet grew eightfold between 2007 and 2022.
In short, the SNB stands out for its rare legal autonomy, clear mandate, tight governance, and ability to act alone, effectively and judiciously, according to national circumstances, while taking into account the international environment.
Criticism of the SNB’s independence
Although the independence of the Swiss National Bank (SNB) is firmly guaranteed by law and supported by a political culture favorable to monetary stability, it is not immune to contemporary debates.
In recent years, several criticisms have emerged concerning its governance, the use of its profits, and its position on climate issues. Elected officials, particularly from the Socialist Party, have proposed expanding the Governing Board, currently limited to three members, to include a diversity more representative of the Swiss population. The absence of women until 2015 and the lack of collegiality in its current functioning, compared to other central banks, have been highlighted. However, the Federal Council has defended the status quo, arguing that an expansion could compromise the SNB’s independence.
At the same time, the use of the bank’s profits has aroused envy. In the 2010s, its financial performance generated significant revenues, attracting proposals to finance public policies, notably via a popular initiative aimed at strengthening the Old Age and Survivors’ Insurance (OASI) system. Although withdrawn in 2023, this idea remains present in the political debate.
Some have also suggested, particularly during the Covid-19 pandemic, that the SNB’s balance sheet should be used to support the economy. However, these proposals conflict with the fundamental principle of separation between monetary and fiscal policy, which the SNB considers essential to preserving its credibility. Its president, T. Jordan, has warned against the risks of political manipulation.
Another source of tension concerns growing expectations regarding climate change. Elected officials would like the SNB to orient its investments by excluding fossil fuels or incorporating sustainability criteria. The bank has reaffirmed that its mandate does not include such objectives and that it has neither the democratic legitimacy nor the tools to pursue climate policy. The idea of assigning it new tasks, such as environmental management or the integration of bitcoin into its reserves, is seen as a direct threat to its independence.
The SNB’s communication has also been criticized, particularly when it abandoned the exchange rate floor in 2015 and in its management of reserves. Although it has published more information, it claims a certain degree of restraint in order to avoid politicizing its actions.
Despite these tensions, there is still political consensus around the SNB’s independence, which is seen as a guarantor of economic stability. Disagreements focus more on how to interpret its mandate or improve its governance. However, history shows that even minor adjustments can gradually weaken a central bank’s autonomy. This is why strengthening the SNB’s independence could make its benefits less politically exploitable. The SNB thus remains exclusively dedicated to its stability mandate, within a balanced democratic framework. This model, the result of a long institutional process, remains fragile and must be vigilantly defended in order to preserve the country’s sustainable prosperity.
