Monetary policy decisions traditionally fall within the competence of the government or finance minister, or are governed by procedures in which the finance minister and the central bank participate.
Unlike foreign monetary orders, neither the Federal Constitution (Article 99 Cst.) nor the Federal Act on Currency and Payment Instruments contains provisions for a national monetary system in Switzerland. This manifests the openness of the legislative power to the two different basic options of monetary policy: the central bank may either aim to achieve domestic value stability – understood as price stability – via control of monetary values, or it may aim to achieve external value stability by keeping the value of the franc constant in relation to another currency or a basket of currencies through foreign exchange transactions. On pragmatic considerations, the law leaves the procedures and responsibilities for determining the external value of the Swiss franc open (possibility of transition to fixed exchange rates).
Since the transition to floating exchange rates (1973), the exchange rate of the Swiss franc has been determined by market forces. An important influencing factor is certainly the monetary policy of the Swiss National Bank (SNB), whose goal according to the National Bank Act is to ensure price stability (domestic value stability). Since the external value of the Swiss franc is of great importance for the pace of the economy – and hence to the development of inflation – the National Bank takes it into consideration when making its monetary policy decisions. Accordingly, Swiss monetary policy is currently de facto under the authority of the SNB. It influences the exchange rate implicitly by way of its monetary policy.