The Swiss National Bank (SNB) is contemplating imposing negative interest rates to ease the flow of capital pouring into the country.
Investors jittery over problems in the eurozone, where Greece and Spain are flirting with financial collapse, see Switzerland as a safe haven.
This has put upward pressure on the value of the Swiss franc, forcing the SNB to set a floor of 1.20 against the euro last September.
But observers now wonder whether the central bank will have to go further.
Denmark, another country regarded as a safe haven outside the eurozone, introduced negative interest rates earlier this month.
These oblige banks to pay 0.2 percent to deposit money with the Danish central bank.
Experts appear divided over whether Switzerland will follow suit, with many believing a negative interest rate would only be introduced in a worst-case scenario for the eurozone.
“You can safely assume that the Swiss central bank is closely watching what their Danish colleagues are doing,” Maxime Botteron, an economist at Credit Suisse Group AG (CSGN) in Zurich, told Bloomberg News.
“Should the situation deteriorate, they might follow suit and introduce negative rates on banks’ sight deposits.”
Finance Minister Eveline Widmer-Schlumpf said last month that the government was regularly evaluating the possibility of adding extra measures to fight the franc’s strength.
But she said such measures would only be a “last resort”.
The high value of the franc makes it difficult for Swiss exporters to compete in the eurozone because the value of their products rises for purchasers in the zone, Switzerland’s biggest trade partner.
According to estimates from OECD (Organisation for Economic Cooperation and Development), the Swiss franc remains 37 percent overvalued against the euro based on purchasing power.