CHF – Swiss Franc
Although the name of the Swiss Franc would perhaps indicate to the reader that this is the official currency of choice within the country of Switzerland, the situation is a little more complex than this. Although it is officially used and circulated within Switzerland it is also used within the jurisdiction of Liechtenstein which itself is a sovereign and independent nation separate and distinct from Switzerland.
To further complicate the matter, the Swiss Franc is also used within the Italian region of Campione D’Italia which although situated within Swiss borders, is under Italian rule. Finally, but by no means of least, the Swiss Franc is also commonly utilised within the jurisdiction of Büsingen am Hochrhein.
Büsingen am Hochrhein is nothing more glamorous or significant that an extremely small German town with less than 1500 residents within its boundaries. What makes the Büsingen am Hochrhein even more of a curiosity to this already bewildering patchwork of territorial and jurisdictional usages for the Swiss Franc is the fact that both officially and legally, the Swiss Franc is not legal tender.
Despite this, it is routinely utilised and accepted by commercial entities throughout the town and even more oddly, it is preferred in place of the official unit of currency which happens to be the Euro. To date, the municipal government of Büsingen am Hochrhein have tried to streamline the process and ensure that the Swiss franc’s conundrum is brought to a final conclusion but there attempts thus far have been thoroughly resisted every step of the way.
The Swiss Franc itself did not come into legal existence until the 19th century when the then Federal Assembly of Switzerland passed the “Federal Coinage Act” in 1850. The effect of the 1850 Act was to ensure that the only legal and officially accepted form of currency within Switzerland and its territories would be the Swiss Franc.
Prior to the passing of the 1850 Act, the various territories and cantons of Switzerland had relied upon a multitude of provincial currencies and so the Act was designed to both harmonize and unify the different provinces together under one collective, national banner.
For generations, the Swiss Franc has been favoured by investment experts and investors from all walks of life for a variety of different reasons. First, the fact that the Swiss Franc has managed to effectively escape and evade recession has been especially attractive as this means that the initial value of the capital sum invested is effectively ring fenced.
Furthermore, up until 2000 there was a legal requirement for the financial institutions within Switzerland to ensure that they had a minimum threshold of 40% of all currency and savings to be backed by gold reserves in an attempt to defray currency speculation and avoid inflation.
Unfortunately, the gold reserve requirement was finally abolished in 2000 after years of campaigning by different interest groups. With the abolition of this law, this meant that the financial groups of the nation were then effectively free once again to utilise and trade their gold reserves as they saw fit and so 2005 marked the year in which the country sought to sell off its gold reserve stock.
The Swiss Franc has enjoyed a fairly robust history, as it has been able to avoid any major “roller coasting” effect of its value.
For example, in 1945 the value of the Swiss Franc against the value of the US Dollar stood at $1 = 4.30521 francs, whereas the exchange rate became $1 = 4.375 francs in 1949.
With strong and responsible fiscal policies, decisive action taken when needed…has meant that the future of the Swiss Franc is all but guaranteed.
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