January 18th, 2012
On 6 September removed the Swiss National Bank announced that it was only a matter of time before it would come to a trend reversal. The devaluation of the euro and the appreciation of the franc began in 2008 and is continuing steadily since then.A second argument that plays on the grounds of the current action as well as in the intervention period 2009/2010 a role to trigger more expansionary monetary policy impulses.In an economy in which on the one hand, government debt is comparatively low and rotate so that a few government debt securities, on the other hand, only a limited amount of corporate bonds is available to such a QE can play but only on the foreign exchange market interventions. This assumes that the monetary policy effects are not sterilized, but fully effective. Since the SNB has operated during the last weeks, a very expansionary monetary policy to bring about a devaluation of the franc, this suggests that currently the maintenance of international competitiveness and thus employment in Switzerland is the primary objective of the minimum exchange rate.
This minimum rate is set equal to 1.20 francs to the euro and the SNB wants him – by his own admission – by all means, ie prevail with unlimited foreign exchange purchases. They are no restrictions, since they can create the currency needed to purchase the Franks themselves. The question is, what costs might be associated with such a guarantee. The focus is on the job or at least limitation of an autonomous monetary policy, given rise to an exchange rate target, the national balance of monetary base, which forms the basis for the creation of money. Without further action, therefore, the expansion of the monetary base leads to an increase in money supply and – with the corresponding time lags – a long-term rise in inflation.