SNB Considered Linking Franc to Currency Basket to Replace Capby
Alternate Board Member Thomas Moser gave speech in Zurich
SNB gave up cap of 1.20 per euro on franc a year ago
The Swiss National Bank considered replacing a cap on the franc against the euro with a link to a basket of currencies, an option policy makers already entertained when they introduced the ceiling in 2011.
“Both times we came to the conclusion it wouldn’t work,” said Thomas Moser, an alternate governing board member who is present at SNB policy meetings.
Moser made the comments on the eve of the one-year anniversary of the central bank’s decision to abandon the 1.20 per-euro cap and allow the franc to float freely again. The measure, designed to shield the economy from a rapid appreciation in the currency amid the euro area’s debt crisis, was replaced on Jan. 15 last year by a deposit rate of minus 0.75 percent and a pledge to intervene in markets if necessary.
The idea of a currency basket for Switzerland has been proposed by central-bank watchers as a way to keep the franc in check. Two former professors, Peter Bernholz of the University of Basel and Ernst Baltensperger of the University of Bern, have both made such a suggestion.
The Swiss currency ended 2015 more than 10 percent stronger against the euro than at the beginning of the year.