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Button-Down Central Bank Bets It All
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With the Swiss economy experiencing falling wages and prices, fears of a deflationary spiral have led the Swiss central bank to take strong action to preserve export competitiveness. The Swiss National Bank is doing this by buying euros and keeping the Swiss Franc from appreciating above 1.20 euros to the franc, a peg set in Sept 2011. Since 2010 the central bank has printed Swiss Francs to buy euros and other currencies resulting in a quadrupling of the foreign assets it holds to about the size of its GDP- about 500 billion Swiss francs or $541 billion. Action of this size is unprecedented and comes as the eurozone economies contract in 2013. It has worked for 16 months and Switzerland has managed to increase exports to the eurozone and keep the Swiss franc below 1.20 euros. Japan's new prime minister Shinzo Abe is pushing a similiar policy to bring the yen down to 90 yen to the dollar to improve export competitiveness.
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Swiss National Bank to Adopt a Negative Interest Rate
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New York Times 01/15/2015
The Swiss National Bank, Switzerland's central bank, and policy to preserve Swiss competitiveness
08/12/2010
The Swiss central bank is intervening in currency markets to keep the Swiss Franc at 1.20 to the euro, a peg set in Sept. 2011. The all out effort reaching the size of Swiss GDP by 2013 is designed to preserve Swiss export competitiveness.
Grouped Articles
Switzerland Takes a Loss Trying to Keep the Franc in Check
New York Times 08/12/2010
Swiss Bank Warns of $10 Billion Loss
Wall Street Journal 01/06/2014
Swiss Franc Rises Ahead of Gold Vote
Wall Street Journal 11/15/2014
Swiss Central Bank to Introduce Negative Interest Rates
Wall Street Journal 12/19/2014
Wall Street Journal 12/19/2014
Swiss National Bank to Adopt a Negative Interest Rate
New York Times 12/18/2014
The Swiss central bank's effort to keep Swiss Franc at 1.20 to the dollar and Japan's Abe government's push for the yen at 90 to the dollar
12/25/2012
A determined effort by the Swiss National Bank to preserve export competitiveness as eurozone economies contract in 2013, by printing francs and buying up euros and foreign assets. The effort is designed to counteract declining wages and prices in Switzerland. The newly elected Japanese prime minister Shinzo Abe supports aggressive action by Japan's central bank to keep the yen between 85 yen and 90 yen to the U.S. dollar.
Linked Articles
Wall Street Journal 12/25/2012
Button-Down Central Bank Bets It All
Wall Street Journal 01/09/2013
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