The Swiss franc

Who took the right to issue Swiss francs

Before the federal state, more than 8,000 different coins and notes circulated among the cantons, and people often preferred a South German silver coin, the kronenthaler, to any of them. The Federal Constitution of 1848 gave the federal government the sole right to issue money. The Federal Assembly passed the first Federal Coinage Act on 7 May 1850, and the cantonal currencies were converted into the new franc.

Banknotes stayed with the cantons and various banks until 1907, when the Swiss National Bank took over. It had no time to design notes of its own before opening its counters. Its first notes, issued on 20 June 1907, copied the pattern of the earlier issuing banks and carried an overprint: a red rosette with the Swiss cross.

How the franc was tied to gold

The new franc held 4.5 grams of fine silver or 0.29032 grams of fine gold. France, Belgium, Italy and Switzerland formed the Latin Monetary Union on that standard in 1865. The union ended officially in 1927. Switzerland kept the standard until 27 September 1936, when, after the pound, the US dollar and the French franc had all been devalued, it cut the franc's gold content by 30%. From 1945 the rate to the dollar stayed fixed under the Bretton Woods system until 1970.

The law also required gold to back at least 40% of the franc. A referendum ended that link, and the franc became fiat money on 1 May 2000. Voters rejected the Swiss Gold Initiative in November 2014, which would have restored gold backing of 20%.

Why Liechtenstein pays in Swiss francs

Liechtenstein used the Austrian krone under an economic and currency agreement with Austria, and the First World War left that krone in hyperinflation. In 1920 the principality printed emergency vouchers of 10, 20 and 50 heller, valid only on its own territory. They lost value as fast as the krone did. People switched to Swiss francs by themselves, and in March 1920 the Liechtensteiner Volksblatt wrote that nobody wanted to be paid in kronen any more.

The government in Vaduz had wanted Liechtenstein franc notes of its own. It gave way in 1923 and signed a customs treaty with Switzerland. The Landtag passed a currency act on 11 April 1924 that made the Swiss franc the only lawful currency, and it took effect on 26 May 1924. Every sum in the principality's laws kept its number: the krone became the franc and the heller became the rappen.

The franc also circulates as legal tender in Campione d'Italia, an Italian exclave surrounded by Swiss territory. In the German exclave of Büsingen am Hochrhein the euro is the only legal currency, yet shops there often quote prices in francs.

What Swiss coins and notes carry

The coins avoid the four national languages. They carry numerals, the abbreviation Fr., the Latin words Helvetia or Confoederatio Helvetica, or Libertas on the small pieces. The 10-centime coin has kept one composition, size and design since 1879, apart from 1918 to 1919 and 1932 to 1939. Swissmint struck the 1-centime coin until 2006, in shrinking numbers. Up to 100 circulating coins are legal tender in one payment, and notes for any amount.

The National Bank has printed nine series of notes and released seven. The fourth and the seventh stayed in reserve and never reached the public. For the ninth series it chose designs by the graphic designer Manuela Pfrunder in November 2005, and put the notes out one at a time, from the 50-franc note on 12 April 2016 to the 100-franc note on 12 September 2019.

Recalled notes keep their value. In 2016 notes of the sixth series worth 1.1 billion francs were still unexchanged, sixteen years after they stopped being legal tender. The Federal Council and the National Bank proposed in April 2017 to drop the deadline for exchanging recalled series, and by 2020 the change was law.