Anyone feeling wrong-footed by the Swiss central bank’s surprise decision to stop holding down the price of its currency should consider placing part of the blame elsewhere — on the abject failure of Europe’s leaders to revive their sinking economy.
Global financial markets went into gyrations today after the Swiss National Bank announced that it would end its more than three-year effort to keep the value of the franc from rising above about 0.83 euro. The franc immediately jumped to about 0.96 euro, dealing a blow to the country’s export and tourism industries, to traders who had bet against the currency and to foreigners who owe money in francs.
Switzerland’s move is a kind of capitulation. With the European Central Bank on the verge of extraordinary stimulus measures that will probably weaken the euro, Swiss central bankers realized that the franc — long a haven for investors fleeing the euro — will come under renewed upward pressure. A voluntary appreciation now, they believe, will be less disruptive than one that’s forced on them later.