The French Franc Dates Back Since 1798
In 1798, when the Helvetian Republic was formed, the French Franc was introduced. But in the war of 1799, the area that was called Switzerland separated from France and was given the new name of the Helvetic Republic.
The Helvetic Republic became a federation in 1803 and in order to do that it needed its own government and its own currency, so the Swiss franc was born.
The Official Swiss Franc was Established in 1850
In 1850, the Swiss franc was established and this was the time when the Swiss franc was first released. The franc was initially equal to the French franc and they were interchangeable. This means that one franc was equal to five and a half-French francs and of course the French franc was a popular currency at the time.
In the years to come, a lot of countries began to use the Swiss franc as their official currency. And when that happened, the value of the Swiss franc was increased. In the 1880’s and the 1920’s, there were two substantial increases to the value of the Swiss franc. In both of these periods, the value of the franc was significantly reduced.
The value of the franc was changed to become similar to the US dollar and the Italian currency which had been devalued significantly. But this devaluation didn’t affect the Swiss franc too much and the franc continued to be utilised as the official currency.
The Swiss Franc is the Only Franc Left in Europe
Since the Second World War, Austria, Czechoslovakia, France, Germany and Yugoslavia have all adopted the Euro.
The Swiss franc has maintained its value and this is something that has worked in the Swiss franc’s favour. The franc has been a very strong currency and it is one of the few currencies in the world that is still independent.
The Swiss Franc is Like Silver and Gold to the World
The Swiss franc is referred to as the ‘safe-haven’ currency of the world. This means that when times are tough, the Swiss franc stands on its own. The Swiss franc is a very strong currency, which means that it is not subject to devaluations or bank failures. This means that the Swiss franc is like gold and silver in the world.
People know that it is a strong currency, which they can trust and they of course, also know that they will be able to convert it into other currencies if they need to.
The Swiss Franc: a Safe-Haven Currency
By allowing the free-market to operate, Switzerland has been able to achieve a strong currency, that is both immune to government interference, and resilient against inflation. Because of these two factors, the Swiss franc is considered a safe-haven currency and is often referred to as a store of value.
With the Swiss franc being the go-to currency against economic uncertainty, it led Switzerland to be one of the most advanced free markets across the world, taking up a whopping 74 per cent of the total gross domestic product (GDP). Meanwhile, an estimate of 28 percent was accounted for all offshore funds banked in Switzerland.
When it comes to the economy’s products, Switzerland typically exports products related in agriculture, metals, chemicals, watches, and machinery. On the other hand, its imports focus on vehicles, metals, textiles, machinery, as well as agricultural products.
Going back to 2016, Switzerland became the first richest landlocked country in the world, falling next to Liechtenstein and Luxembourg. Fast-forward to 2019, the country also takes pride in having little-to-no impact from the inflation, only amounting to a low 0.4 percent. In 2020, Switzerland ranks as the 18th largest national economy by nominal GDP, resulting in a spectacular worth of US$750 billion.
Not to mention, the Swiss currency can be accessible on a larger scale compared to highly stable fallbacks like gold, and the fact that Swiss francs are one of the most liquid assets make it the optimal choice for institutional investors and governments.