Swiss Franc Essay

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1. Appreciation of the Swiss franc
1.1 Causes

The global financial crisis led to a significant weakening in economic growth. The worldwide recession hit almost every country and financial uncertainty was dominating the markets. This has mainly happened due to the insolvency of many system-relevant financial firms, such as the Lehman Brothers, Fannie Mae & Freddie Mac. The franc has been permanently revaluated since 2008.

1.2 Measures against the strength of the Swiss franc
After the SNB had almost completely exhausted the interest margin by means of liquidity-providing repo transactions and foreign currency swaps 14 , in 2009 it took "unconventional measures" 15 to increase the degree of expansion of monetary policy. Because the immense …show more content…
5 & Fig. 6), making the euro more unattractive and increasingly pressure on the lower limit 1.20 CHF per euro was …show more content…
5 & Fig. 6), making the euro more unattractive And pressure on the lower limit of CHF 1.20 per euro has been exerted.31 "Under-utilization" 36 of production factors due to falling demand for Swiss goods abroad. Declining profit margins would force companies to become more efficient, leading to layoffs and pressure on wages. If such a phase were to continue for a longer time, this process and the country would fall into a recession.37 In these circumstances, the SNB saw itself forced to act in 2011 to meet its legal obligations to maintain price stability and to take account of " .

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