Published: 11 Feb 2013 13:22 GMT+01:00 | Print version
Updated: 11 Feb 2013 13:22 GMT+01:00
The risks for Europe's economy remain too serious to allow Switzerland's central bank to change its currency cap, a member of its governing body said in an interview published on Monday.
"The economic environment worsened again at the end of last year and the growth outlook was lowered," Fritz Zurbrügg told the daily Aargauer Zeitung, adding that exchange-rate risks were still on the cards as a result.
"For that reason, the minimum exchange rate remains key," said Zurbrügg, who joined the governing body of Switzerland's central bank in August 2012.
In September 2011, the central bank fixed a minimum exchange rate of 1.20 Swiss francs to the euro.
Investor flocked to the Swiss franc, traditionally regarded as a safe-haven currency, as worries grew over the debt crisis in the eurozone.
An overvalued franc hurts the competitiveness of Swiss industry, however, thereby harming exports, and concerns about the economic impact drove the central bank to step in in 2011.
But with the recent revival of the long-embattled euro, the Swiss franc has lost strength, trading over recent days at close to 1.23.
That has fuelled speculation that the central bank could raise the floor.
Zurbrügg declined to say whether the bank was considering such a move, saying the minimum rate remained an important.
"We introduced the minimum rate to stem the rapid, major appreciation of the Swiss franc," he said.
"We achieved that goal and we defused the risk of a deflationary trend."
Zurbrügg said that the Swiss franc nonetheless remained overvalued against the euro.
"The minimum exchange rate is an exceptional measure, not a tool for adjusting monetary policy," he said.
"The minimum exchange rate remains the most appropriate instrument for price stability in the foreseeable future."
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