Holding Down The Value Of Swiss Franc, Right Monetary Tool - Swiss National Bank

20 Feb 2013

The Swiss National Bank's policy of holding down the value of the Swiss franc is the right monetary tool for Switzerland's economy now and will continue to be enforced with the "utmost determination," SNB Chairman Thomas Jordan said Tuesday.

In prepared remarks for a speech in Zurich, Jordan rejected the argument that Switzerland's large current account surplus suggests the Swiss franc is too weak. Most of the surplus is not impacted by exchange rate developments, but rather is dependent on "developments abroad, international financial markets and global demand for commodities" that are out of Switzerland's control, he explained.

"The current account surplus does not play a role in monetary policy," he said. "In an open economy like Switzerland, however, sizeable exchange rate fluctuations have a strong impact on production and prices."

"In the current environment, and with interest rates close to zero, the minimum exchange rate is therefore the correct monetary policy instrument," he asserted. "The SNB will continue to enforce it with the utmost determination. We are prepared to take additional measures at any time if warranted."

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