The U.S. dollar and euro have each lost approximately half their purchasing power since the turn of the millennium, according to data from St. Galler Kantonalbank. The Swiss franc, by contrast, has retained about 85% of its value relative to 2000, reflecting the Swiss National Bank’s (SNB) tighter monetary policy framework.
Purchasing power erosion has been uneven across major currencies. The U.S. dollar’s value has halved, while the euro has declined by 44%. The contrast is starkest when compared to the Turkish lira, which has effectively collapsed, with 100 lira in 2000 now equivalent to just 0.3 lira in real terms. The SNB’s policy of maintaining price stability within a 0 to 2% annual consumer price index (CPI) increase has contributed to the franc’s relative resilience, the bank noted.
Service sector prices in the U.S. have risen three times as much as in Switzerland since 2000, while average wages in the U.S. have grown at an annual rate of 3.7%, compared with 1.1% in Switzerland. The Federal Reserve and European Central Bank (ECB) target long-term inflation at 2%, though both have faced periods of significant deviation. In 2022, U.S. inflation peaked at 9%, while Swiss inflation briefly reached 3.5% in August 2022—its highest level in three decades—before easing to 2.2% in May 2023.
Thomas Stucki, Chief Investment Officer at St. Galler Kantonalbank, attributed the franc’s stability to the SNB’s consistent focus on price stability. 'The Swiss National Bank appears to be more successful than the Federal Reserve in controlling price and wage expectations,' he said. The SNB’s mandate contrasts with the Fed and ECB’s 2% inflation targets, which have proven challenging to maintain amid global economic shocks.
Historical extremes underscore the risks of unchecked inflation. Germany’s 1923 hyperinflation, where one U.S. dollar cost 4.2 trillion marks and a loaf of bread reached 300 million marks, serves as a cautionary example of inflation exceeding 50% annually.
