"What the Swiss government and central bank have done to their economy and finances is a disgrace. We hold no Swiss francs any longer. The Swiss people have been treated badly." 6 November 2008 Le Café AméricainWe warned some time ago that the Swiss franc, long a beacon of monetary stability through the world, has been horribly compromised by a central bank with policies little different from those of the Fed, and other central banks using competitive devaluation to promote industrial policy.
If you are a Swiss exporter or a Bank you might be content.
If you are Swiss and you wish to preserve your wealth, buy gold.
"…the national bank will continue to act decisively to fight the impact of the economic contraction… a central bank can always increase the absolute amount of its own currency in circulation... the national bank could sell Swiss francs against other currencies without limits. In an extreme case, it could commit itself to buying foreign currencies at a fixed rate."
Philipp Hildebrand, Vice Chairman, Swiss National Bank
Hildebrand Says SNB Can Intervene in Franc Market
By Joshua Gallu and Simone Meier
Jan. 22 (Bloomberg) -- Swiss National Bank Vice-President Philipp Hildebrand said policy makers are prepared to intervene in currency markets at fixed exchange rates if necessary to prevent a “renewed appreciation” of the franc...
The franc has risen around 6 percent against the euro since October as the global financial crisis forced the Swiss central bank to cut its benchmark rate by 225 basis points, taking it to 0.5 percent. That’s smothering inflation and hurting exports, which make up more than half of Swiss gross domestic product. (And the other half is dominated by banks which are largely insolvent through mismanagement and various forms of fraud - Jesse)“With short-term rates of practically zero, the SNB can’t prevent a further appreciation in the Swiss franc through a rate cut,” Hildebrand said in a speech in St. Gallen, Switzerland late yesterday. “The SNB is able to sell unlimited Swiss francs versus another currency. In an extreme case, it can commit itself at the same time to buying unlimited currencies at a fixed- exchange rate.”
The franc dropped after the remarks and extended its decline today. As of 7:51 a.m. in Zurich, it was at 1.5093 per euro from 1.5022 yesterday. It reached a record high of 1.4315 versus the euro on Oct. 27. Against the dollar, the franc was at 1.1562, having fallen late yesterday to 1.1616, the weakest since Dec. 15.
“The central bank can and will continue to provide liquidity, as much and for as long as needed,” Hildebrand said. “The SNB will continue to act in a decisive way in order to counter the effects of the economic contraction.”
