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Profit Distribution

The rapid growth of SNB’s foreign investments has increased its profits over the last decade. Yet, the share that is distributed has declined. Much more has gone to continuously build up the central bank’s equity. This is not sustainable because according to the current framework equity would grow without limit, making distributions impossible in the long run. To be sure, foreign investments are risky and the SNB is required to smooth the amounts that it distributes. Both requirements imply that it holds reserves. Yet, the needs for reserves must be carefully and publicly evaluated and not allowed to keep rising. We formulate proposals to that effect.