Some implications of the new agreement on the distribution of SNB profits

Daniel Kaufmann

No 21-01, IRENE Policy Reports from IRENE Institute of Economic Research

Abstract: I simulate the distribution of SNB profits to the Confederation and Cantons under a hypothetical scenario, in which the new agreement between the Swiss National Bank and the Federal Department of Finance would have been in place from 2005-2019. All else equal, the new agreement leads to: (i) a higher average profit distribution; (ii) larger annual fluctuations of profit distributions, complicating fiscal authorities' budget planning; (iii) pro-cyclical profit distributions (lower [higher] during economic recessions [booms]). Having said that, the SNB's profit distributions account for a relatively modest share of total government expenditures. In addition, to offset the volatile and pro-cyclical profit distributions, fiscal authorities may borrow on capital markets.

Keywords: Swiss National Bank; Federal Department of Finance; agreement on profit distribution (search for similar items in EconPapers)
JEL-codes: E58 E63 (search for similar items in EconPapers)
Pages: 9 pages.
Date: 2021-01
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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