"Well, that escalated quickly" would probably be a pointing term to describe the Swiss National Banks (SNB) situation, (that we outlined here already). The 3rd quarter reported loss of the year 2022 so far amounts to 142 billion Francs (plus >40 billions in 3rd quarter alone) and although that lefts just a tiny 60bn Francs of equity in the balance-sheet of the giant, now here and there appeasements come up and everyone is assuring the other and himself in a Rondo: "A central bank could not go broke / bankrupt."

Well, we are not so sure about this "common knowledge" and the misunderstandings are two-fold:

• It is wrong to mistake illiquidity for insolvency. While a central bank could of course not become illiquid since it is the source of this liquidity it can of course become insolvent / bankrupt.
• The connex of the central banks balance sheet and the valuation of its emission -- notabene the Swiss Francs, the money -- is misunderstood. Even further, most economists are unable to think of the economy as a net of balance-sheets that are connected in simple mechanisms, algebra.

We repeat our expectation: The market will test the owners of the SNB (Swiss cantons, international privates) and the public and before end of 2023 we will see a technical insolvency of the SNB -- that has to be covered by someone, probably the central government. So, prepare for a heated debate about the SNBs gambling, its balance sheet-size, its tasks (!) and its legal room for maneuvre (!) -- this might become interesting. That there are consequences for the CHF is very obvious, too.