SNB’s Dependency on the Mercy of the Markets and the End of Seigniorage

I reveal how SNB’s balance sheet expansion and its investment decisions interfere with monetary policy. For this aim, I decompose the returns on foreign reserves into three parts: A virtually disappeared seigniorage profit. A currency portfolio that results from FX interventions. It reveals how inflation and global and Swiss monetary policy stance lead to structural gains and losses on SNB’s balance sheet. And, finally, an investment portfolio whose existence is difficult to justify by monetary policy. It carries substantial risk and interferes with inflation and hence SNB’s mandate. Overall, SNB’s risk taking looks excessive and not well suited to support its policy goals