Swiss must continue to defend franc against euro

Ahead of the elections in Greece the Swiss National Bank (SNB) stated on Wednesday that it would continue to maintain the exchange rate for one euro at 1.20 Swiss francs. This is the only viable course right now, writes the liberal-conservative daily Neue Zürcher Zeitung: "If the usual political suspects and bankers now feel obliged to start saying aloud that politicians can't guarantee a lower limit to the exchange rate indefinitely, this is simply irresponsible. The SNB introduced the lower limit to protect the Swiss economy in an extraordinary situation. It chose to peg the franc to the euro significantly under the real equilibrium rate. If the situation on the financial markets calms down once more, the euro rate should settle somewhere above 1.20 francs. Then the time will come to say goodbye to the fixed exchange rate and return to normal monetary policy. But the rougher the sea is now, the more necessary it will be to defend the lower limit on the exchange rate."

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