* SNB's Maechler says franc is still "significantly overvalued"
* Says political uncertainty dominates at the moment
* Says Swiss economic recovery not yet broad-based
By John Revill
ZURICH, March 23 (Reuters) - 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 Thursday.
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 overvalued".
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