GENEVA: Central Bank senior official said Switzerland would have had to spend more than $100 billion this month alone if it had continued efforts to hold down the value of its currency.
The Swiss National Bank scrapped a three-year-effort to keep down the value of the franc, sending the Swiss currency soaring by as much as 30 percent.
The soaring franc wreaked havoc on global markets and bankrupted several foreign exchange traders.
But the central bank has ardently defended the move, insisting its efforts to enforce the ceiling, including purchasing massive amounts of foreign currency, were no longer sustainable.
Fritz Zurbruegg, a member of the Swiss National Bank’s governing board said in the days running up to the decision to abolish the ceiling the sum ploughed in was increasing.
He more added if the bank had continued its efforts, we would have spent about 100 billion francs (100 billion euros, $116 billion) for January alone. We came to the conclusion that the best option was to free up the exchange rate.
The decision was taken by the bank’s top triumvirate: chief Thomas Jordan, Vice president Jean Pierre Danthine and Zurbruegg.
The SNB had been defending the exchange rate since September 2011 in an effort to protect the country’s vital export and tourism industries. The franc has stabilized around parity with the euro, a strengthening of some 17 per cent from the previous limit of 1.20 francs to the euro.
