What is the 'CHF (Swiss Franc)'

CHF is the currency abbreviation for Switzerland's currency, the Swiss franc. 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 — or member states — 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.

There were a total of 72.255 trillion Swiss francs in circulation on average in 2016, according to the Swiss National Bank. 

Background

The Swiss franc was first issued in 1850 and was on par with the French franc. 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 II and lasted until the early 1970s. The currency's exchange rate was tied to the price of gold until a referendum in May 2000.

Between 2003 and 2006, the Swiss franc was stable against the euro. It was even valued higher than the USD in 2008. 

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, which was 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 Swiss 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 central bank of Switzerland and ...
  2. Paris Pair

    The Paris Pair was a nickname for a U.S. dollar/French franc ...
  3. Swissie

    Swissie is a slang term used by the investing community for the ...
  4. Key Currency

    A key currency used is money issued by stable, developed country ...
  5. ADF (Andorran Franc)

    ADF was the currency abbreviation or currency symbol for the ...
  6. Currency

    Currency is a generally accepted form of money, including coins ...
Related Articles
  1. Trading

    Is The Swiss Franc A Good Investment?

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

    How To Invest In The Swiss Franc

    The Swiss franc is one of the safe havens of the investing world. Learn how invest through ETFs, forex, futures, and binary options.
  3. Trading

    Why Switzerland Scrapped the Euro

    Why did the Swiss scrap its peg to the Euro and what impact will it have globally?
  4. Investing

    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.
  5. Investing

    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.
  6. Investing

    Switzerland's Biggest Equities ETFs

    Despite challenging times for some Swiss firms, investments in the Swiss stock market are still considered a safe haven and ETFs are an interesting option.
  7. Investing

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

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

    What to Expect After the Swiss Currency Shock

    What to expect for the world economy after the Swiss currency shock.
  9. Investing

    Top 3 Switzerland ETFs (EWL, HEWL)

    Explore detailed analysis and information of the top three Swiss exchange-traded funds that offer exposure to the Swiss equities market.
  10. Trading

    6 top-traded currencies and why they're so popular

    Every currency has specific features that affect its underlying value and price movements in the forex market. Learn why these currencies are especially popular for trading.
RELATED FAQS
  1. 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 >>
  2. 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. Read Answer >>
  3. What are the Gnomes of Zurich?

    The "Gnomes of Zurich" is a euphemism for Swiss bankers. The name is meant as an insult because gnomes, most often found ... Read Answer >>
  4. When and why did the euro make its debut as a currency?

    On January 1, 1999, the European Union introduced its new currency, the euro. Learn more about its history. Read Answer >>
  5. How do national interest rates affect a currency's value and exchange rate?

    Generally, higher interest rates increase the value of a country's currency and lower interest rates tend to be unattractive ... Read Answer >>
Trading Center