The Swiss National Bank is perhaps the epigone of a double-breasted bank, reserved and austere. But at the same time it has recently moved with the agility and recklessness of an inveterate gambler: it has spent an amount close to the country's entire GDP, with the aim of halting the appreciation of the franc and protect export industries.
The Bank is a victim of Switzerland's own success, seen as a safe haven for capital in times of storm; and heaven knows how stormy these times have been. Last year, the central bank drew a line in the sand of the markets: the Swiss franc should not cross the limit of 1,20 against the euro.
This limit was maintained, but at the price of capital outflows - purchases of assets in foreign currency with the creation of francs by the Central Bank - which brought the bank's assets, as mentioned, to levels equal to 100% of Swiss GDP . By comparison, the assets of the Fed, which have soared with the policy of quantitative expansion of the currency, are equal to about 20% of US GDP, and those of the ECB have risen to 30% of the GDP of the Eurozone. The Swiss National Bank could see its capital wiped out in the event of unfavorable movements in the euro exchange rate.
Wall Street Journal
