Switzerland tops the currency board, but the lesson isn't 'buy francs'
Analysis - 2026-05-29 - by The Mild Take
currency, switzerland, diversification, methodology
┃ This is educational analysis, not financial advice. Nothing here is a
┃ recommendation to buy, sell, or hold any currency, security, or asset. The
┃ scores are general, not personalized; they ignore your tax residence, income,
┃ liabilities, and time horizon. Currency and cross-border positioning carry real
┃ risk. Consult a licensed professional before acting.
Abstract
For the currency decision, the top of the board is Switzerland (6.31), Norway
(5.84), Singapore (5.75), Luxembourg (5.44), Slovenia (5.00), Denmark (4.56). The
intuitive takeaway ("so hold Swiss francs") is the wrong lesson, and the
methodology itself explains why. The currency score is the narrowest and most
concentrated of the three decisions, and a single high score is an argument for
diversification across high-scoring channels, not for concentration into one.
What the currency score measures
The currency decision is weighted heavily toward the economic category (0.60),
then institutional (0.20), geopolitical (0.15), and a sliver of
political/social (0.05); physical conditions carry zero weight. In plain
terms it asks: how trustworthy is the monetary and fiscal machinery behind this
unit of account over a near-term horizon? Central-bank independence, fiscal
state, inflation control, reserve status, and capital-account openness dominate.
Switzerland scores at the top because every one of those is strong and boring
(a credible central bank, low and stable inflation, deep institutions, an open
capital account).
Why a top score argues for diversification, not concentration
Three reasons sit inside the framework rather than outside it:
1. The decision is near-term by construction. Currency uses the near horizon;
it deliberately says little about the 10-year picture. A high near-term score
is not a long-duration safe-haven promise.
2. Concentration re-introduces the very risk the score rewards avoiding. The
top currencies score well partly because their issuers have no single
dominant failure mode. Holding only one of them re-creates single-issuer risk
at the portfolio level (the opposite of the property being measured).
3. Several units share the top. Switzerland, Norway, Singapore, and the
euro-bloc small states cluster within ~1.3 points. The framework is not
identifying one winner; it is identifying a set of trustworthy units. A
read consistent with the data spreads liquid holdings across that set rather
than picking the ordinal #1.
This is also why the US currency score (#172, -4.16) matters here: the dollar
still carries a large near-term reserve privilege (its 'reserve_currency'
sub-factor is +5 near), but the score is dragged down by the institutional
entanglement around it and a -3 long-term reserve outlook. A diversification
thesis treats the dollar as one channel with real and rising risk. It is not a
default holding.
Discussion
The "buy the #1" instinct is exactly the error a multi-factor, multi-decision
framework is built to resist. The currency board's real message is structural:
trustworthy monetary units are a small club, the club has several members, and
the property you want (resilience to a single failure) is a portfolio property,
not a single-holding one. Mapping the score to action means spreading liquid
savings and assets across several high-scoring channels aligned with your own
constraints, not converting everything into the top-ranked one.
Limitations
• The score rates the issuer's machinery, not the unit's price path. A
well-run currency can still appreciate or depreciate sharply for reasons
(rate differentials, flows) entirely outside what is measured.
• It ignores your tax, residence, and liability currency (the factors that
most determine what is actually prudent for an individual).
• Near-horizon by design: it is silent on multi-decade regime questions.
What would change this
A loss of central-bank independence, a fiscal rupture, or capital controls would
move a top currency down fast. On the dollar specifically, restored statistical-
agency independence and a predictable trade posture would lift the long-term
reserve outlook and narrow the gap to the leaders.
See the currency ranking (https://themildtake.com/ratings/) (sort by currency) and the