How does one rate the stability of world currencies?  what are
considered to be the three most stable currencies in the world?

1: The Swiss Franc
2: The Swiss Franc
3: The Swiss Franc

Why?

Because all the politicians stash their loot there.

This is rather surprising:

"What is particularly scary about the dollar is that it has been the
third-best-performing currency in the world. Only the Swiss franc and
the Dutch guilder (by a very small margin) have held up better."

http://news.goldseek.com/DailyReckoning/1079632533.php

The Dutch Guilder?

Alas, 'tis no more!

Clue: Euro.

I am dimly aware of the Euro. I had presumed that we were speaking of
currencies through history.

Hmmmmm

What was it that Henry Ford said about History?

Remind me!

"the only history that is worth a tinker's damn is the history we make
today."  -- Henry Ford, famous tinkerer

But seriously, folks. Why is it that the Swiss franc is considered to
be so darn reliable? I think the reason they's that got like to put
their money in a Swiss account has more to do with the fact that the
information about it is kept top secret. But what actually causes
stability in currency? Is it just that if everybody thinks it's so,
that makes it so?

Hi timespacette-ga

Many thanks for reminding me about Henry.

Yes, I am sure that the secrecy thing is of paramount importance,
together with their reputation for honesty & whatever.

It is only a very small country and, as Orson Welles memorably
uttered, all it is famous for is its cuckoo clocks.

So, stacks of hot money gets secreted away there, away from Tax
Collectors, avaricious ex-wives, rival politicians, the ex-King's
subjects, etc., etc.

And here's the really clever thing ... a LOT of the hot money stays
there forever because the rightful owners or the next-of-kin cannot
find it when the Grim Reaper visits those secretive Account Holders.

Wow ... what a business!

I should be so lucky.

<quote>
Is it just that if everybody thinks it's so,
that makes it so?
</quote>

Like most things related to Economics, I suspect that what happens is
a combination of underlying forces and 'self fulfilling expectations'.

Because the Swiss have an incredibly stable economy, they are pretty
much immune from the crises that allow hysterical FOREX dealers to
chase the currency all over the map. This means that they can pretty
much control their USD/SFR exchange rate.

Although money pours into Switzerland, it does not necessarily pour
into Swiss Francs. The Swiss are sophisticated enough to offer USD,
GBP, EUR etc bank accounts. Also, if one thinks about it, the Swiss
have very little domestic need for the money, and the idea of it
sitting in vaults (physical or virtual) is ludicrous. They need to
/lend/ the money - and the borrowers are unlikely to want to spend it
in Switzerland.

I have a vague memory that at one time SFR deposits in Switzerland
actually 'earned' a negative rate of interest. A strong incentive for
a USA resident to opt for a USD slush fund. Perhaps even a portfolio
of long dated USD Treasury Bonds and some sensible shares - all, of
course, held by the bank and not subject to iniquitous taxation.

The current situation with the USD is extremely interesting, by
radically devaluing the USA encourages exports, discourages imports
and reduces USD denominated overseas debts against foreign currency
reserves. (ie: buy a lot of JPY (Yen) devalue (talk the dollar down),
and sell them back at a massive profit).

In conclusion, the Swiss Franc is not a 'real' currency.
Not that I would be averse to a healthy wad of SFR in my inbox.

And yes, I think Henry Ford said :

   'History is bunk'

Personally I doubt that he was accurate.

I'm sorry, but I work in a private bank in Geneva, Switzerland and
several of the statements made in these comments made my hair curl.

The Swiss Franc is a stable currency primarily because
1/ It's a neutral country with an army convincing enough to maintain its neutrality
2/ The swiss are, by and large, agrarian and extremely conservative;
they watch and wait, and learn from others' mistakes
3/ The swiss are by nature hard-working, discrete and meticulous

These factors have made Switzerland (and in particular Geneva, the
home of Calvin) an ideal place to provide banking services. Having
done so successfully for over 200 years, the swiss have earnt a
reputation.

Mis-conception: Money in Switzerland is ill-gotten. Switzerland has
banking secrecy for legal funds only. The money-laundering laws are by
far the tightest in the world, both the authorities and the banks
actively seek out dirty money and cooperate with most courts in the
world. Both America and England would do well to stop knocking the
swiss (for purely commercial reasons) and clean up their own acts
first.

Fact: Dormant accounts (presumably belonging to the desceased) are
investigated continuously and external auditors report on banks'
success/failure to restitute funds. Remember that the Swiss banks paid
2'000'000'000 francs (about 1'540'000'000 dollars) to the holocaust
victims two years ago; sadly the beneficiaries are still bickering
about who will get the money.

Fact: Most of the 35% of the entire world's wealth that is managed in
Switzerland is invested in bonds, shares and fiduciary deposits. Here
is the actual breakdown:
shares	37%
bonds	34%
fiduciaries	18%
cash	4%
alternative investments	3%
derivatives	3%
metal	1%

Oh, and the Swiss Franc is a *very real* currency, as I pleasantly
discover every time I travel abroad >;-)

Well, I was speaking of Zurich ...

I have never seen any banks in Geneva ...

Except the banks of that lake, whatever it is.

And is that fountain still splashing?

From smirkingman: "The Swiss Franc is a stable currency primarily because
1/ It's a neutral country with an army convincing enough to maintain its neutrality
2/ The swiss are, by and large, agrarian and extremely conservative;
they watch and wait, and learn from others' mistakes
3/ The swiss are by nature hard-working, discrete and meticulous"

I appreciate your position to engage in this forum; would you qualify
the above statement?  Having lived in Switzerland myself, I know how
hard-working and meticulous the Swiss can be. I once witnessed a
farmer spend all afternoon trimming the grass between his fence and
the road with a pair of hair scissors . . . but here are my questions:
what does having a "convincing army" have to do with a stable
currency?  I mean, if that is true then why is the USD not at the top
of the list? I don't know anything about the Swiss army except they
have a thing for knives and every chalet has weapons hanging in their
vestibule in ready for immediate mobilization.  They are a landlocked
country protected by bridges and tunnels only, but in this day and age
what good could that possibly do?  I'm back to the question of what is
it that actually causes stability.  You haven't convinced me; I still
think it's just because of consensual opinion, and despite what Henry
said about history, people ride on that and the Swiss franc continues
to have this reputation.  But then consensual reality is what the
money game is all about, right?

First, Smirkingman I want to assure you that I have nothing personal
against the Swiss, and that the following is not an attack on you.

Secondly, I would like to ensure that we get our facts straight

Thirdly, I neither condemn nor condone the past and present activities
of the Swiss.

1/ It's a neutral country with an army convincing enough to maintain its neutrality

During the WWII Switzerland manufactured goods for Germany, aircraft
bomb sights were one of their exports (if I remember correctly). The
American/British had a few 'accidents' and bombed Swiss factories.
I have heard that German Panzers went through Switzerland, to Italy I think.
Note: the peace loving Swedes made armaments - Bofors springs to mind.
The fact that all males have to spend some weeks training, and that
they keep weopons at home is pretty irrelevant in these days of high
tech warfare, and would have been little more than a minor nuisance in
1939-45
I have also heard that gold was pouring into Switzerland from Germany.
Personally I think that the Swiss have been wise remaining non-combatant.

2/ The swiss are, by and large, agrarian and extremely conservative;

The Swiss have a fair manufacturing industry, they also import day
labour from neighbouring countries. I expect many Swiss are very
conservative, but I've also heard that they have rather a drug
problem.

3/ The swiss are by nature hard-working, discrete and meticulous

Possibly, but the Germans are by nature hard working, and City of
London back office staff easily (used to?) out class those of
Frankfurt.
The Swiss probably are 'discreet' (discrete means something else - be
careful there - advice not a dig).

The Swiss certainly have earnt a reputation for banking and portfolio
management. Calvin might, or might not have approved. That is not
really relevant. Personally I reckon that there is an 'evolutionary
slot' for a neutral banking centre. Switzerland just happens to fill
that slot.

Under considerable pressure Swiss banks have disclosed information to,
primarily, America. I really do not believe that they tip off the IRS
every time an American citizen makes a large deposit. Would you
believe that when I make a moderately large deposit in my personal
bank account, my bank has to ring me up and ask me about it.

You are certainly right that the UK is a good place to hold funds,
provided one is not a UK resident. One of the reasons so many US banks
opened up in London was because of the laxer banking laws. I provided
software to two non-UK banks that were simply in London because they
could get away with more. One was considering 're-locating' to the
Isle of Man when things got tighter, and another abruptly shut up
shop. Unfortunately the UK brought in a bunch of monkeys to 'regulate'
things - TSA FSA come to mind. Some of the stuff they made banks do
was ludicrous.

Personally I think that attempts to 'clean up' the UK banking system
have been severely detrimental to the sector.

The holocaust pay out was just a form of 'settlement out of court'.
Quite a smart move, as you have astutely pointed out, it now has
people squabbling with each other.

As for the SFR being a 'real' currency, well you pretty much make my point.
Following the principle of 'commodity arbitrage' prices should be
relatively similar in similar countries.
As it is, everything in Switzerland is incredibly expensive to GBP,
USD, EUR visitors, while everything for Swiss travellers is dirt cheap
when they travel abroad.

This is, I believe, a smart move on the part of the Swiss, and as an
aside I consider GBP grossly overvalued, which for the UK's shaky
economy, is extremely stupid.

None of this is meant to knock the Swiss. They have been very astute
and pragmatic. Hmmm ... with the exception of SwissAir.

I am not sure how they managed to keep their economy and society so
well managed, but suspect that it is something to do with the Cantonal
system, which probably prevents a bunch of muppets in central
Government playing dodgem cars with our 'environment'.

Shrewd observations, frde!

In WWI, Switzerland used to import barbed wire from Germany, take off
the tell-tale tags and export it to France. Very smart!

And don't forget the BIS (Bank of International Settlements) which
ticked away very happily through WW2 with all sides sitting around for
friendly chats.

Clever people!

Timespacette --

The Fraser Institute (Canada) started measuring aspects of economic
freedom components in 1996 in the first edition of "Economic Freedom
of the World, 1975-1995."  It treated 4 major aspects of every
economy:
1.  money and inflation (money supply growth, inflation variance,
ownership of foreign currency, ability to own offshore bank accounts)
2.  government operations
3.  transfer payments & conscription
4.  international sector

Though current versions of the report has changed criteria, paying
much more attention to legal structures, it is still very similar:
http://www.freetheworld.com/release.html

The 1996 first edition notes that "the strengths of the Swiss economy
are a very stable monetary regime buttressed with the liberty to user
alternative currencies (note the near perfect rating in the monetary
area)."  The reports are also very good for a medium-term, with data
going back to 1975.

Best regards,

Omnivorous-GA

I recall that, at one stage during WW2, Adolf made plans for invading Switzerland.

I used to wonder what stopped him.

Maybe he was terrified of the Swiss Army with their multi-purpose knives?

Or maybe he was just too much of a gentleman to attack soldiers in skirts?

Soldiers in skirts ?

About 35 years ago I was on (I think) the underground in (I think)
Geneva, when a bunch of Swiss soldiers got on.

Their rifles had plugs in the barrels, but their uniform was
reminiscent of the WWII Wehrmacht - especially the helmets.

It was pretty darn spooky.

Hi, Jerry

'A Bunch' of Swiss soldiers?

There are only two of them ...

http://www.ontheroadin.com/miscellasneouspictures/Photographs%20of%20Italy/slides/Swiss%20guard%20at%20Vatican.html

But I can see why you were scared.

All the Best

Bryan

Gawd, they look a pair of dorks.

I wonder whether they pay them 'humiliation money'
- to compensate them for being laughed at.

THE SWISS REPORT

======================================================

Switzerland lies landlocked in Western Europe, ... Even Adolph
Hitler's Wehrmacht, which
conquered all of Europe in the early months of World War II, chose not to attack 
Switzerland despite the fact that the small country was in the
crossroads of Western Europe.
Switzerland is, of course, neutral, but it was not mere respect for
its neutrality which
kept the Nazi armies and others before it out of the tiny country. It
was the determination
of the Swiss people to defend their neutrality and the credibility of
their means to do so.
That determination remains alive today ... Within 48 hours, the Swiss
can field an army of
more than 600,00 men ... War supplies, medical supplies and food
supplies are meticulously
stored in more than 100 kilometers of tunnels ... obstacles ...
barriers ...demolition
devices ... In short, Switzerland is an armed bunker. Yet, there is _no_ standing 
Army, no ... enormous drain on the Swiss economy ... How the Swiss
have achieved this
credible deterrent to invasion is the subject of this report. The
Swiss security system is
unique as well as an example of what a democratic nation can
accomplish by applying reason
and logic to problems which have been realistically and carefully analyzed.

Niccolo Machiavelli, the 15th century Italian student of power,
remarked of the Swiss,
"They are the most armed -- and most free people in Europe." ... Today 
Switzerland maintains its neutrality, but practices what it calls solidarity ...


SWISS STRATEGIC THINKING

"Historical experience shows that if a nation is not able to defend
itself and to protect
its spiritual and material values, it will become, sooner or later,
the target of power.


THE MILITIA SYSTEM

... The Swiss have no illusions about their ability to defeat a major
military power.
They could not have defeated the Nazi army which for a time considered
invading Switzerland.
They mobilized, however, and made it clear beyond a shadow of a doubt
that if the Nazi army
invaded, it would be fiercely resisted and that the tunnels and passes
into Italy would be
destroyed. In a classic example of dissuasion at work, Hitler's
general staff recommended
against an invasion on the grounds that the costs would be
disproportionate to the gains.

The Swiss military forces are composed almost entirely of the militia.
... The Swiss
militia system is unique and is not comparable to the present Reserve
and Guard forces in
the United States. The basis for conscription is the constitution, which mandates 
military service for every Swiss male from age 20 to 50 (55 in the
case of officers). There
are no exceptions. Conscientious objectors are given a choice between
Army non-combat units
and jail. Those physically unfit for military duty but employable are
required to pay a
tax. Women are not included in the compulsory military service system, but small 
numbers of them are accepted on a volunteer basis for non-combatant positions.




A third advantage is that every male, age 20 to 50, who is an elected
official or civil
servant in the government at all levels is also a member of the Swiss Army. ...

A fourth advantage is that Switzerland does not have a high proportion
of defense dollars
going to personnel costs. ...

At the age of 19, young men are given physical and mental tests in preparation for 
military service. ... At age 20, recruits report for 17 weeks of
training. ... At the end
of the training cycle, the recruit, now a member of a militia unit
with which he will stay
in most cases for the duration of his obligation, returns home. He
carries with him his
rifle, an allotment of ammunition, uniforms, military pack, and CBR
mask. He is responsible
for the maintenance of this equipment and is inspected annually. Once
a year he is also
required to qualify with his personal weapon on a rifle range (300
meters!) or face an additional three
days of training. Once a year, he will report for three weeks of
military training in a
rugged field exercise set up as a problem the type of which his
particular unit would face.

... The Swiss Army is organized into four Army Corps. ... The Swiss logistics 
system is a work of genius and is tailored to the requirements of ... These 
underground facilities not only contain stores of ammunition and other
war supplies but
also ... They also practice the principle of commonality so that military, civil 
defense, and police equipment are the same. ...


MILITARY DOCTRINE

Once mobilized, the Swiss Army would fight as a conventional force.
Swiss military doctrine
calls for meeting the aggressor at the borders and waging total war. ... The Swiss 
terrain -- ... This combination of powerful resistance by conventional forces, 
continued resistance by guerrillas, and ...

The armed population is no bluff. Swiss militiamen are not required to
turn in their weapons
upon completion of their obligation. It is said that every Swiss home
contains at least
three weapons, ...


THE TERRITORIAL SERVICE

A unique component of the Swiss Army is the Territorial Service. ...


CIVIL DEFENSE

Some critics of the Swiss system have expressed the belief that the
possession of nuclear
weapons has made the strategy of dissuasion obsolete. These are, to be
sure, those critics
who view nuclear war as an offense for which there is no defense. The
Swiss do not agree.
Recalling on of their strategic objectives as protection of the
civilian population, the
Swiss government has realistically assessed that objective in light of
nuclear, chemical,
and biological warfare. Their answer was to embark on an extensive
civil defense program
...

Private shelters ... Public shelters are equipped with ... The Swiss have 
spent, since 1970, 5 billion Swiss francs on civil defense and are
currently spending at
the rate of 210 million Swiss francs annually. ... Public support for
civil defense
is widespread. ...


SUMMARY

Switzerland, a small country with limited resources, has
conceptualized, planned, and
implemented a rational security policy which provides maximum effect with minimum 
expenditures. ...To a remarkable degree, the Swiss require private sector 
participation in the defense effort. ... The Swiss General Defense system provides 
a high dissuasive value and credibility to this small, neutral country
in the heart of
Europe. ... Thanks to Civil Defense as well as intricate economic preparedness, 
there is a high degree of survivability even in a modern war of long duration. ...

I have worked in many private banks over the years. I am English and
have lived in Switz. for 13 years. The Swiss Franc is a strong
currency because it is underwritten by gold reserves many times the
amount of paper printed. All the worlds rich tax avoiders bank there
because tax avoidance is not illegal in Switz. plus all the dicatators
stashing their cash. The Swiss are amongst the most rascist countries
I have lived in, but no worst than most. Their record in the second
world war was not good, survival mixed with a happy desire to make
loads of money. They were the Nazi's money launders if I understand
history correctly. I have seen active service in the British Army,
their citizen army is not worth a damn, they would never stand. They
hide behind their defences and buy off anyone who threatens. Not a
very flattering picture, it has chnaged a lot in the last ten years.

it is australian dollar then the us dollar then the euro