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As Euro member they wouldn't have the problem, The problem is the swiss franc as a  "safe" currency. Couldn't really happen with a peg either.

And they introduced not a peg but ceiling. By printing money.

by IM on Thu Sep 8th, 2011 at 01:03:42 PM EST
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Indeed it is and indeed they did. And quite frankly it seems like an excellent solution to a comfortable problem. Funnily, some politician recently argued that Sweden should enter a currency union - with Switzerland.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Sep 8th, 2011 at 08:48:34 PM EST
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Well, if they want to share a almost permanent over-valued currency.
by IM on Wed Sep 14th, 2011 at 11:21:07 AM EST
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And they introduced not a peg but ceiling.

Switzerland can't unilaterally defend a peg, it can only unilaterally defend a ceiling. If you want a peg to the CHF, the ECBuBa needs to be willing to print money on demand, in whatever quantity required, to fix the lower bound of the €/CHF exchange rate.

That's the only way you can ever defend a peg.

And the BuBa gave a quite instructive exposition on its attitude towards doing its part to defend European currency pegs back in 1993.

By printing money.

You say that like it's a bad thing.

You do understand that this is precisely what the SNB would have been doing if they were defending a peg rather than a ceiling, right?

The point of declaring a ceiling rather than a peg is that the SNB has not committed itself to defending the floor when the hot money leaves. Which means that it is free to expend its hard currency reserves in discretionary defense of strategically important imports, rather than handing it over to the first Soros wannabe who manages to short a hundred billion CHF.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Sep 9th, 2011 at 10:29:39 AM EST
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he BuBa gave a quite instructive exposition on its attitude towards doing its part to defend European currency pegs back in 1993


16 September 1992-2 August 1993

Crises in the ERM. In 1992, investors lose confidence in the stability of the pound sterling, in particular, and then, in 1993, in the French franc, resulting in speculative selling of the pound and franc; in 1992, the United Kingdom and Italy leave the ERM; in 1993, the fluctuations margins around the bilateral central rates are expanded sharply. The Bundesbank with its commitment to price stability had refused to lower interest rates massively. The partner countries are forcibly reminded of their responsibility for their currencies; the process of convergence needed for monetary union is strengthened.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Sat Sep 10th, 2011 at 04:57:14 AM EST
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