ZURICH: Swiss National Bank Vice President Fritz Zurbruegg defended the bank’s main tools for taming the strong franc – negative interest rates and currency intervention – in a newspaper interview, despite concerns its policies are fueling a real estate bubble.
“In Switzerland we need negative interest and the readiness to intervene in currency markets in order to be able to fulfill our monetary policy mandate,” Zurbruegg told the Neue Zuercher Zeitung (NZZ) in an interview published on Saturday. Zurbruegg acknowledged that long-term low interest rates can lead to imbalances including in the property market. But he said other instruments such as Switzerland’s countercyclical capital buffer for banks’ domestic mortgages that was activated in 2013 are there to help mitigate threats of a mortgage market bubble.
