Why is the Swiss franc the worlds strongest currency?
(a) Economic fundamentals: A history of low inflation and current account surpluses are crucial determinants of the Swiss francs long-term performance. The currency has retained its purchasing power better than any other currency over decades. (b) Gold-backing: The franc is more than a paper currency it is backed by gold. Swiss law requires a minimum of 40% in gold reserves for every franc in circulation. At todays gold market price, actual gold reserves significantly exceed currency in circulation by more than 100%! (c) Sound policies: The Swiss National Bank has indeed proven its worth in creating the worlds best-managed currency. In large part, this is due to its high degree of autonomy from political influences. It is thus better able to concentrate on its primary goal of fostering price stability.
