by Malcolm Curtis|The Local Switzerland|January 16, 2015
For some it was a “bold step”, for others a foolhardy move that risks harm to the economy and job losses. The Swiss National Bank’s decision to stop capping the level of the franc against the euro after more than three years has sparked a national debate and created worries in many quarters about threats to Switzerland’s robust business climate.
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Christoph Blocher, a figurehead for the right-wing Swiss People’s Party, said he couldn’t say whether the central bank’s decision was the right one.
But “what happened today on the financial and currency market is a shock,” Blocher told the SDA news agency, referring to the sharp drop in the stock market and the equally sharp rise in the value of the franc against the euro and US dollar.
He said it was clear that removing the cap — which the industrialist supported when it was introduced in 2011 — would have become more difficult the longer the SNB waited.
However, the consequences of the decision now are that “unemployment will increase and poorly organized companies will possibly even disappear,” Blocher said.
Some right-wing and centre-right politicians were supportive of the central bank’s decision, pointing out that the weakness of the eurozone was putting it in an untenable situation, having to make massive euro purchases to maintain its minimum value of 1.20.
They also believe the decision showed that the SNB can now lead an “independent” monetary policy with a floating exchange rate.
Thomas Jordan, central bank president, told a press conference the decision on the franc was “bound to take the markets by surprise” but the bank’s management had become convinced that maintaining the euro price floor was “unsustainable”.
The bank decided to cut its reference interest rate to minus 0.75 percent to make the franc less attractive to investors and currency traders.
Jordan said the negative rates would not affect small savers because “banks need to offer attractive conditions on customer deposits”.
Economy Minister Johann Schneider-Ammann told media he was surprised about the central bank’s decision, saying he was only informed about it shortly before it was made public on Thursday morning.
The Liberal party member said he was confident Swiss companies could adapt to the new environment, though he also urged people to wait and see how the euro exchange rate will settle.
But he added that now it was even more important to ensure bilateral agreements with the European Union are reached and to push for corporate tax reform to offer companies an attractive tax jurisdiction.
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