Jump to content
House Price Crash Forum

Swiss Nat Bank Ends Peg To Euro!


Recommended Posts

The SNB also elected to push its key interest rate deeper into negative territory, lowering this from -0.25pc to -0.75pc, in order “to ensure that the discontinuation of the minimum exchange rate does not lead to an inappropriate tightening of monetary conditions”.

http://www.telegraph.co.uk/finance/currency/11347218/Swiss-franc-surges-after-scrapping-euro-peg.html

So, let's see: I pay in CHF 100,000, and a year later the SNB gives CHF 99,250 back to me. They are draining money supply, because CHF that the SNB keeps simply evaporate in a reduction of their balance sheet. :D To achieve inflation, they apply deflation. Very interesting!

Link to comment
Share on other sites

  • Replies 317
  • Created
  • Last Reply

Top Posters In This Topic

http://www.telegraph.co.uk/finance/currency/11347218/Swiss-franc-surges-after-scrapping-euro-peg.html

So, let's see: I pay in CHF 100,000, and a year later the SNB gives CHF 99,250 back to me. They are draining money supply, because CHF that the SNB keeps simply evaporate in a reduction of their balance sheet. :D To achieve inflation, they apply deflation. Very interesting!

They are trying to sterlise CHF gains due to unpegging by making it less attractive holding CHF. They can't stop the CHF getting drunk, just don't want it pissed. Better than spending an unknown sum trying to keep a peg in place.

Link to comment
Share on other sites

http://www.telegraph.co.uk/finance/currency/11347218/Swiss-franc-surges-after-scrapping-euro-peg.html

So, let's see: I pay in CHF 100,000, and a year later the SNB gives CHF 99,250 back to me. They are draining money supply, because CHF that the SNB keeps simply evaporate in a reduction of their balance sheet. :D To achieve inflation, they apply deflation. Very interesting!

The more they try and increase velocity,the lower it goes.

Link to comment
Share on other sites

Surely just Swiss mulinationals earning capacity being revalued in terms of the rest-of-the-world currency basket; about 15% less in CHF than yesterday.

I'm more worried about the SNB's balance sheet, which they have been furiously buying EUR and selling CHF to keep the peg:

(and all those mortgages in CHF taken out in Hungary, and the rest of eastern europe....)

CB%2Bbalance%2Bsheets.PNG

Edited by weaker
Link to comment
Share on other sites

What does this actually mean... in numpty terms for those who don't understand it... Gold is up and apparently lots of hedge funds are about to go bust... but what are the implications of this for stuff that affects people's lives?

The swiss currency just got 15% more valuable.

People relying on the peg at EUR1.20 just got slaughtered (Hungarian mortgagors, hegies).

The Swiss national bank just lost 15% on it's EUR holdings.

All Swiss companies are being priced in a currency which is 15% more valuable than it was yesterday; hence stock market falls.

Anything else?

Link to comment
Share on other sites

The swiss currency just got 15% more valuable.

People relying on the peg at EUR1.20 just got slaughtered (Hungarian mortgagors, hegies).

The Swiss national bank just lost 15% on it's EUR holdings.

All Swiss companies are being priced in a currency which is 15% more valuable than it was yesterday; hence stock market falls.

Anything else?

Could unhinge the EUR and set that rolling downhill. CHF peg is effecively EUR support.

Edited by onlyme2
Link to comment
Share on other sites

The swiss currency just got 15% more valuable.

People relying on the peg at EUR1.20 just got slaughtered (Hungarian mortgagors, hegies).

The Swiss national bank just lost 15% on it's EUR holdings.

All Swiss companies are being priced in a currency which is 15% more valuable than it was yesterday; hence stock market falls.

Anything else?

Could it crash the stock markets. Gold seems to be going up.

Link to comment
Share on other sites

The swiss currency just got 15% more valuable.

People relying on the peg at EUR1.20 just got slaughtered (Hungarian mortgagors, hegies).

The Swiss national bank just lost 15% on it's EUR holdings.

All Swiss companies are being priced in a currency which is 15% more valuable than it was yesterday; hence stock market falls.

Anything else?

The hundreds of thousands of cross border workers in Switzerland just got a big pay rise. That isn't going to please some native Swiss.

Edited by Quicken
Link to comment
Share on other sites

Now that Swiss have effectively just left the euro zone it makes a german exit look a little less unlikely.

Was thinking along the lines of exit may be for more politically significant than just the peg, they may decide they want to stay as independent as possible rather than a slow merge with EU,heck migration adn terrorism could even come into the mix and the ability to run their own policies in those regards.

Why do you say a German exit less likely?

Link to comment
Share on other sites

Was thinking along the lines of exit may be for more politically significant than just the peg, they may decide they want to stay as independent as possible rather than a slow merge with EU,heck migration adn terrorism could even come into the mix and the ability to run their own policies in those regards.

Why do you say a German exit less likely?

RK said less unlikely = more likely.

Link to comment
Share on other sites

The swiss currency just got 15% more valuable.

People relying on the peg at EUR1.20 just got slaughtered (Hungarian mortgagors, hegies).

The Swiss national bank just lost 15% on it's EUR holdings.

All Swiss companies are being priced in a currency which is 15% more valuable than it was yesterday; hence stock market falls.

Anything else?

So those sitting on dead money savings not chasing yield, accepting 0% or even -negative for Switzerland, just got a nice pay day. Can hope it comes here, vs house prices.

One of my bosses (old guy) when I was Summer job working at the Highways Agency (he was on the local council side) in 1996 told me his family savings, in Swiss banks, had hardened some 800% against the GBP over decades. I can recall looking into it at the time, and there were large gains. He'd just bought his daughter a house for cash.

Another time, YHA trip through Europe, Swiss guy was bragging to me how Swiss companies involved in everything, especially in the arms/weapons trade.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

  • Recently Browsing   0 members

    No registered users viewing this page.





×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.