Switzerland has quietly been adjusting the way it manages its vast foreign currency reserves, and the latest numbers from the Swiss National Bank (SNB) suggest a deliberate and potentially far-reaching shift.
On Tuesday, the SNB published its quarterly balance sheet, showing it purchased 5.06 billion Swiss francs ($6.36 billion) of foreign currencies in the April–June period — the largest quarterly intervention in more than three years. Most notable, however, is that the lion’s share of this purchase appears to have been in euros, rather than U.S. dollars.
For the first time since 2020, the euro now accounts for 39 percent of Swiss foreign reserves, edging past the dollar’s 37 percent. The implications are subtle but significant, reflecting not just the mechanics of Swiss monetary policy but also broader questions about the changing architecture of global reserve management.
Managing the franc: stability over politics
Switzerland faces a perennial challenge. As a safe-haven currency, the Swiss franc attracts capital in periods of global turbulence. That inflow strengthens the franc, making exports more expensive and exerting deflationary pressure on the domestic economy. The SNB routinely intervenes in foreign exchange markets to moderate the franc’s strength, smoothing volatility without triggering outright currency wars.
In the second quarter of 2025, the franc appreciated sharply against both the dollar and the euro, though the climb against the dollar was more pronounced. That left the euro a more efficient tool for intervention. By buying euros, the SNB can influence the franc’s value relative to its largest trading partner while diversifying currency holdings. In short, this is a pragmatic adjustment: the euro is both economically and operationally more effective for the SNB’s immediate goals.
Diversifying risk in a changing world
The euro pivot also reflects broader concerns about risk management in the SNB’s staggering $1.1 trillion reserve portfolio. Large holdings concentrated in a single currency expose any central bank to valuation swings and geopolitical exposure. While the U.S. dollar has historically dominated global reserves, the post-pandemic era has seen central banks reassess the balance. Fiscal uncertainties, shifting U.S. monetary policy, and global political frictions make a heavy dollar tilt increasingly costly.
Switzerland’s reallocation toward euros is modest but symbolically important. It reduces reliance on a single currency, aligns reserves more closely with Switzerland’s trade patterns — the eurozone accounts for nearly half of Swiss exports — and signals a more cautious, diversified approach to external assets. The euro now represents a reserve allocation more consistent with Switzerland’s real economic exposure, reflecting an intentional strategic recalibration.
The diplomatic dimension
Currency reserves are never purely economic. They carry implicit diplomatic and signaling weight. Switzerland has faced scrutiny in the past over potential accusations of currency manipulation, particularly from the United States. In recent years, the U.S. Treasury placed Switzerland on a watchlist, warning against interventions that could confer an unfair trade advantage.
By focusing on euros rather than dollars, Switzerland reduces friction with Washington while strengthening ties with its European neighbours. It is a careful balancing act: the SNB can continue to intervene in markets to maintain stability without appearing to target U.S. trade competitiveness. The move also underscores Switzerland’s broader foreign economic alignment: its fortunes are tied more to Europe than to transatlantic flows, and its reserve strategy now reflects that reality.
Implications for global markets
Switzerland’s reserve portfolio is one of the largest in the world. Even minor shifts in allocation can ripple across currency markets, influencing demand, spreads, and investor sentiment. The SNB’s euro preference may encourage other central banks to reassess their own exposures, particularly in light of growing U.S. fiscal pressures and monetary policy uncertainty.
Global reserve managers watch Switzerland closely precisely because it is seen as conservative and technically competent. If the SNB favors more euro exposure, it implicitly legitimizes similar moves elsewhere, potentially accelerating the diversification away from dollar dominance. Over time, these cumulative adjustments could subtly reshape the architecture of international finance.
Strategic lessons
Several lessons emerge from the SNB’s latest interventions. First, central banks increasingly operate not just as monetary stabilizers but as portfolio managers balancing multiple objectives: exchange rate stability, domestic inflation control, and risk management. Second, global reserve structures remain malleable; dominance of the dollar is no longer a given, and elite institutions like the SNB are at the forefront of rebalancing efforts.
Finally, the episode illustrates the nuanced interplay between economics and diplomacy. Switzerland’s euro purchases are simultaneously a domestic monetary strategy, a hedge against risk, and a signal to both the U.S. and Europe. These layers of motivation reflect the complex realities facing modern central banks: decisions are rarely isolated, and reserve management has become a form of soft power.
Looking ahead
The SNB’s euro tilt may be just the beginning. The franc will continue to attract capital in times of global stress, and the bank will almost certainly intervene again to smooth volatility. Future shifts in U.S. or European economic policy could prompt further rebalancing, potentially cementing the euro’s rising role in global reserves.
For markets, Switzerland’s moves are a reminder that foreign exchange interventions are about more than short-term rates; they are instruments of strategic positioning in a multipolar world. The euro’s ascent in Swiss reserves may appear incremental, but in a portfolio of more than $1 trillion, even small percentage shifts carry global significance.
In short, Switzerland is quietly signaling a new reality: the age of unquestioned dollar dominance is evolving, and careful, pragmatic central banks are recalibrating in response. For investors, policymakers, and observers of the global financial system, the SNB’s euro pivot is a development worth watching closely.
Main Image: By Romy Biner-Hauser – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17895954
