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Here's What the Swiss Central Bank Just Did and Why Its Such a Shocker
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Hungary's story since the fall of the Berlin Wall- a 36% decline in the forint relative to the Swiss Franc since 2004 and half of all mortgage loans denominated in Swiss Francs
11/13/2014
The experience of borrowers since Hungary joined the European Union in 2004 has not been a happy one. Borrowers with little knowledge of the risks in currency markets borrowed in Euros and Swiss Francs. By 2006 growth slowed, unemployment increased, and the economy stuck with litle or no growth since 2006 is smaller now than in that year. The Orban government has taken steps to reduce monthly payments with an increase in the total amount owed, converting loans to forints, and imposing about $3.5 billion in compensation costs to borrowers on the banks- relief that still leaves borrowers in debt that may never be paid off and unable to borrow for other needs. This has increased the popularity of the Orban government, yet no one has emerged a winner. It has also soured Hungary's experience with free markets.
Grouped Articles
Borrowers in Hungary Learn Tough Lessons
New York Times 11/13/2014
New York Times 01/15/2015
Swiss Move Roils Global Markets
Wall Street Journal 01/16/2015
Here's What the Swiss Central Bank Just Did and Why Its Such a Shocker
BusinessWeek 01/18/2015
Central Europe and the Swiss franc: Currency risk
Economist 01/18/2015
The Swiss National Bank's decision on Jan. 14, 2015, to drop the 2011 peg of 1.2 euros to the franc, and reduce interest rates to negative 0.75%
01/15/2015
The Swiss National Bank gives up the effort to maintain the 2011 peg of 1.2 euros to the franc, as the anticipated ECB action for the Jan. 22 ECB meeting to weaken the euro further draws near. By offering negative yields on deposits of francs the bank plans to reduce the attractiveness of the franc as a safe haven. The Swiss franc surged by 15%, stock of exporter Swatch dropped 16% and the Swiss Stock Exchange showed a decline of 9%. Stocks of Nestle and Novartis, other exporters, also declined.
Grouped Articles
Franc Soars After Swiss Drop a Cap on Its Value
New York Times 01/15/2015
New York Times 01/15/2015
10 Takeaways From Lagarde’s Swipe at the Swiss National Bank
Wall Street Journal 01/15/2015
Swiss Move Roils Global Markets
Wall Street Journal 01/16/2015
Swiss Bank Shares Plummet After SNB Move
Wall Street Journal 01/16/2015
Fallout From Swiss Move Hits Banks, Brokers
Wall Street Journal 01/16/2015
The surprise move by the Swiss National Bank in Jan 2015 removing the 1.20 euro cap on the Swiss Franc damages reputation of the central bank
01/16/2015
The foreign exchange reserves had grown massively on the balance sheet of the SNB by 2014, and following the referendum on increasing gold holdings at the SNB the policy of currency interventions had become controversial. The anticipated ECB move for monetary easing lowering the value of the euro made the cap increasingly untenable. Still the surprise move and the manner it was handled by the SNB president Jordan without any communication with financial markets following a Dec. statement that the SNB had "steadfast determination" in its cap, has shaken confidence in the SNB and central banks. The Swiss Franc surged following the announcement and Switzerland may be headed for a recession with the impact on tourism and export sectors.
Grouped Articles
Swiss Shock Tarnishes Central Banks
Wall Street Journal 01/16/2015
Swiss Move Prompts Fears of Sustained Market Tumult
New York Times 01/16/2015
Here's What the Swiss Central Bank Just Did and Why Its Such a Shocker
BusinessWeek 01/18/2015
Surge of Swiss Franc Triggers Hundreds of Millions in Losses
Wall Street Journal 01/19/2015
Wall Street Journal 01/19/2015
Swiss Franc Bets Turned on a Dime
Wall Street Journal 01/19/2015
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