Even The Swiss National Bank Limps In The Current Crisis

By Author: Italo Zanotti
Total Articles: 62
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The Swiss National Bank objected to the appreciation of the franc in recent weeks about the euro. The deepening crisis in the European currency has forced the NBS to intervene to defend the exchange, buying tens of billions of euros. According to Bloomberg, at this point 68% of the budget of the SNB is represented by assets in euros. Hardly, this percentage will grow much. This exposes the SNB the risk of heavy losses if the euro continues to weaken, largely supported by market opportunities. A major strengthening of the franc, as well as producing heavy losses for the SNB, it risks undermining the competitiveness of Swiss industry, with heavy consequences on employment and public budgets. The reduced tax revenues would be accompanied by a decrease in the SNB pays dividends to the cantons and the Confederation. A further risk is that, following the euro at a ruinous race to the bottom, the SNB will eventually lose control of the price level. Indeed, the purchase of euro is the issue of France, not bought back by selling bonds. The control of interest rates becomes problematic, given the need not to make the franc more attractive ...
... alzandone remuneration.
The European Union's inability to present a program of financial management credibility in the markets (issuing new debt to meet the existing debt is not a solution) makes it unlikely aid from neighboring countries. Switzerland must face the situation alone. It may seem that the situation in Switzerland is privileged, in a sense, the franc is bursting with health, unlike almost all other currencies, but the outbreak may still be ruinous to our economy.
It would appear that the SNB its cartridges running out and that can only count on the federal government for relief. The lever has exhausted its potential monetary and fiscal measures can only balance the accounts. Essentially it comes to making investment less attractive in francs. One can discuss whether to establish an entrance fee on new capital investments in France, as it does Brazil, which imposes a tax of 2% on imported capital. Otherwise you may tax non-resident accounts in francs or consider similar measures. In any case, the objective of the tax must be moderate discouraged use of the franc as safe haven, and possibly make room for the SNB to manage its monetary policy according to the needs of the Swiss economy, with no mortgage markets currency.
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