* SNB's Maechler says franc is still "significantly
* Says political uncertainty dominates at the moment
* Says Swiss economic recovery not yet broad-based
By John Revill
ZURICH, March 23 The Swiss National Bank is
looking at ways to diversify the vast foreign currency assets it
built up during its campaign to rein in the highly valued Swiss
franc, SNB Governing Board member Andrea Maechler said on
The SNB's foreign currency investments have ballooned to
674 billion Swiss francs ($679.23 billion) - larger than the
size of the entire Swiss economy, raising concerns the bank
could swing between big profits and losses in the future.
In 2016 the central bank spent 67.1 billion Swiss francs on
foreign currencies as it sought to curb upward pressure on the
franc, which Maechler again described as "significantly
Although the SNB has expanded its investments to include the
Korean won and Chinese yuan as well as buying stakes in small
cap companies, it is becoming more difficult for the SNB to find
places to park its holdings, Maechler said.
"Although an expanding balance sheet does not make the
process of diversification any easier, we will not be curtailing
our efforts on this front," Maechler said in a remarks prepared
for a speech in Zurich.
"We are constantly assessing and optimising the instruments
we have at our disposal."
The SNB's investment policy was secondary to its monetary
policy, which aims at ensuring price stability and supporting
the Swiss economy, deputy governing board member Dewet Moser
said at the same event.
If adjustments are needed to its stock holdings, "the SNB
aims for minimal market impact by splitting every order into
hundreds of transactions that are executed throughout the
trading day," he said.
Maechler said considerable risks remained for Switzerland's
economy during 2017. This week the Swiss government cut its
growth forecast for 2017, citing a hangover from weakness at the
end of 2016.
"Political uncertainty dominates at present, notably with
respect to the future course of economic policy in the U.S.,
various elections in Europe, and the complex Brexit
negotiations," Maechler said.
The bank's monetary policy had supported moderate economic
growth, she said. The SNB forecasts 1.5 percent growth for 2017.
"Having said this, the momentum we are seeing is not yet
broad-based," she said. "Large sections of the export industry
as well as areas of the economy that face import competition
continue to suffer due to the overvaluation of the Swiss franc."
($1 = 0.9923 Swiss francs)
(Reporting by John Revill; Editing by Michael Shields)