Swiss franc

The Swiss franc is the official currency and legal tender of Switzerland and Liechtenstein. It is also used in the Italian exclave of Campione d'Italia, which is surrounded by Swiss territory. The Swiss National Bank (SNB) is responsible for issuing banknotes. Meanwhile, a federal mint called Swissmint produces the coins. In international banking, the currency is identified by the ISO 4217 code CHF. While businesses often use symbols like Fr. or fr., the official international abbreviation is CHF. The smallest unit of the franc is one hundredth, known as rappen in German or centimes in French.

To understand the franc, one must look at the complex history of Swiss money. Before 1798, the region lacked a single monetary system. Approximately 75 different entities produced their own coins. These included 25 cantons, 16 cities, and various abbeys. This fragmentation resulted in about 860 different coins circulating at once. Most of these currencies were based on either the French livre tournois or the South German gulden. Because of this variety, many people preferred using foreign coins like French francs or kronenthalers. These foreign coins were more widely recognized across different regions.

In the late 18th century, different Swiss regions used different standards. The livre of Bern and western cantons like Basel and Vaud followed the French model. These were often divided into 20 sols or 10 batzen. In contrast, central and eastern cantons like St. Gallen and Thurgau used the South German gulden. The gulden was typically divided into 40 schilling or 60 kreuzer. These local currencies often acted as community money. They were common in one canton but lacked value in another. This made large-scale trade very difficult for the people living there.

A major shift occurred with the Helvetic Republic in 1798. This new government introduced a franc modeled on the Bern livre. This franc was subdivided into 100 rappen. Although the Helvetic Republic ended in 1803, its currency served as a model for many cantons. These included the Appenzell, Basel, and Zürich francs. Even after 1815, the system remained disorganized. By 1820, there were still 8,000 distinct coins in circulation. Some cantons tried to fix this by forming a monetary concordate in 1825. They issued standardized Konkordanzbatzen coins featuring a Swiss cross.

The modern Swiss franc was finally established through federal law. The Swiss Federal Constitution of 1848 gave the federal government the sole power to issue money. On May 7, 1850, the Federal Assembly passed the first Federal Coinage Act. This act officially introduced the franc as the national monetary unit. It was set at par with the French franc. At that time, one franc contained 4.5 grams of fine silver. This was equivalent to 0.29032 grams of fine gold. This standardization helped stabilize the economy and replaced the thousands of old coins.

For much of its history, the Swiss franc was closely tied to precious metals. In 1865, Switzerland joined the Latin Monetary Union with France, Belgium, and Italy. This agreement set a standard value for national currencies based on silver and gold. The franc remained on this standard until the Great Depression in 1936. During that time, the franc underwent a 30% devaluation. Historically, the franc has been viewed as a safe-haven currency. This is because the law required a minimum of 40% gold backing. However, a referendum in 2000 ended this link, making the franc fiat money.

In recent years, the value of the franc has faced significant volatility. Between 2011 and 2014, the currency became very strong against the euro. This strength was partly caused by the Greek sovereign debt crisis. The Swiss National Bank had to intervene to prevent "overvaluation." They set a minimum exchange rate of 1.20 CHF to the euro in September 2011. The bank was prepared to buy unlimited quantities of foreign currency to protect the economy. If the franc is too strong, it can make Swiss exports more expensive. This shows how closely the currency is tied to the health of the nation's businesses.