SNB and EURCHF
The business daily Handelsblatt writes:
“The problem (with the decision to peg the franc to the euro) is that its ultimate success is not, in the end, under the control of the Swiss National Bank. For a long time now, the franc’s exchange rate has had little to do with fundamental economic indicators and a lot to do with fear: the fear that the euro zone will not get its debt problems under control. Some investors have even been willing to accept negative interest for Swiss franc investments just so they could own francs.”
“But even the Swiss central bank would be powerless against a renewed wave of panic. Should doubt crop up once again as to Italy’s solvency — or even that of France — the franc exchange rate could no longer be controlled.”
“By pegging the franc to the euro, the Swiss central bank gave up independent control over monetary policy. Yet according to Swiss law, it can only do so for a limited amount of time. The markets know that too — and they likely have more patience in this game.”