CHF (Swiss Franc)

What is the 'CHF (Swiss Franc)'

The CHF is the currency abbreviation for the Swiss franc, which is the currency of Switzerland. The country's official name is the Swiss Confederation, which dates back to 1291; the abbreviation "CHF" is derived from the Latin name of the country, "Confoederatio Helvetica," with the "F" standing for "franc." The Swiss franc was officially recognized as Switzerland's currency in May of 1850, when it replaced several currencies issued by the different cantons.

BREAKING DOWN 'CHF (Swiss Franc)'

Switzerland is comprised of 26 different cantons, and there are four official languages: German, French, Italian and Romansh. The Swiss franc is one of the few unifying characteristics of the country; it is also legal tender in the Principality of Liechtenstein. The Swiss Federal Constitution of 1848 specified that only the federal government would be permitted to issue money, and the franc was introduced two years later.

Background

Between 1865 and the 1920s, Switzerland, Belgium, France and Italy formed the Latin Monetary Union; the prices of all four currencies were linked to the price of silver. The Swiss franc was part of the Bretton Woods exchange rate system that was established in the aftermath of World War Two and lasted until the early 1970s. The currency's exchange rate was tied to the price of gold until a referendum in May 2000.

Switzerland is known for its neutrality: It has not participated in an armed conflict since 1815. The country's banks have had a policy of secrecy dating back to the Middle Ages, and this was written into law in 1934. The secrecy laws were amended in 2009 to limit tax evasion by non-Swiss account holders.

Safe Haven Status

The Swiss National Bank has long followed a zero inflation policy; this has combined with the country's political neutrality to make the franc an exceptionally strong and stable currency. The franc's so-called safe haven status means that it appreciates during times of economic and political instability; this was particularly the case when the European debt crisis erupted in 2008. In September 2011, the Swiss National Bank began an active policy of intervention in the currency markets combined with interest rate cuts in order to weaken the franc against the euro, capping its strength at 1.20 francs to the euro. The SNB introduced a policy of negative interest rates in December 2014, but the currency continued to appreciate. The 1.20 cap was abandoned in January 2015.

Trading the Franc

The Swiss franc is actively traded in the foreign exchange spot and forward market. It's most active against the euro, but is also frequently traded against the U.S. dollar, Japanese yen and British pound. The low interest rate environment means that speculators frequently borrow in francs to invest in high yielding currencies and other assets around the world.

RELATED TERMS
  1. Swiss National Bank

    The Swiss National Bank is the bank that is responsible for setting ...
  2. French Franc - F

    A currency used in France, prior to the introduction of the euro. ...
  3. CFP Franc - XPF

    The currency of four French overseas collectivities that include ...
  4. Funding Currency

    The currency being exchanged in a currency carry trade. A funding ...
  5. ADF (Andorran Franc)

    The currency abbreviation or currency symbol for the Andorran ...
  6. SIX Swiss Exchange

    Switerzland's primary stock exchange, located in Zurich. The ...
Related Articles
  1. Trading

    Buying Swiss Francs as a Long-Term Investment: Risks & Rewards

    Learn about the risks and rewards of investing long term in Swiss francs and the history of the Swiss franc's exchange rate against the dollar.
  2. Trading

    Is The Swiss Franc A Good Investment?

    Individual investors, businesses, financial institutes and even countries have been keeping their money in Swiss francs.
  3. Trading

    Why The Swiss Franc Is So Strong

    We look at the recent and historic strength of the Swiss franc, as well as recent actions by the Swiss National Bank.
  4. Trading

    The Swiss Franc: What Every Forex Trader Needs To Know

    Find out what you need to know before you start trading the Swiss franc.
  5. Trading

    Why Switzerland Scrapped the Euro

    Why did the Swiss scrap its peg to the Euro and what impact will it have globally?
  6. Personal Finance

    Switzerland's Declining Tax Haven Appeal

    Switzerland's tax haven allure is being threatened by efforts by the US and other governments to make Swiss banks give up their much-vaunted secrecy.
  7. Markets

    This Central Bank Owns U.S. Equities Worth 20% of GDP

    Discover more about Swiss National Bank's holdings of financial assets, and look into its recent accumulation of foreign equities.
  8. Trading

    The Best Hours To Trade The Swiss Franc

    Diverse reporting schedules keeps Swiss franc forex markets active and liquid between midnight and noon U.S. Eastern Time.
  9. Trading

    Is Now the Right Time to Invest in the Euro? (DRR)

    The euro has been falling...does that mean it's now a bargain?
  10. Trading

    What to Expect After the Swiss Currency Shock

    What to expect for the world economy after the Swiss currency shock.
RELATED FAQS
  1. Is France a developed country?

    Discover what qualifies France as a developed country and how its diverse economy has helped it become one of the largest ... Read Answer >>
  2. Why is Switzerland considered a tax haven?

    Learn how Switzerland is considered a tax haven, even though its government has signed agreements to disclose information ... Read Answer >>
  3. How do I open a Swiss bank account, and what makes them so special?

    Surprisingly, opening a Swiss bank account is not that much different from opening a standard bank account because you have ... Read Answer >>
  4. How do changes in national interest rates affect a currency's value and exchange ...

    Understand the role that changes in interest rates can play in determining the value and foreign exchange rate of a country's ... Read Answer >>
  5. How does inflation affect the exchange rate between two nations?

    Understand how inflation can affect foreign exchange rates of a currency and how it is just one of many economic factors ... Read Answer >>
  6. What are the most common currency pairs traded in the forex market?

    There are many official currencies that are used all over the world, but there only a handful of currencies that are traded ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center