Acting Man
SocGen Thinks CHF is the ‘Next Safe Haven to Fall’The Swiss franc has become a ‘safe haven asset’ during the euro area’s debt crisis, along with a number of other peripheral European currencies, especially the Scandinavian ones. Similar to the central banks in Scandinavian countries, the Swiss National Bank (SNB) thereupon instituted a major inflationary policy, including in this particular case not only ‘ZIRP’, but also the enforcement of a floor rate versus the euro, so as to avert ‘deflation’ and ‘damage to the export industry’ – in other words, the SNB decided to risk the value of its currency as well as the formation of a major asset bubble for misguided mercantilistic reasons. Nevertheless, buyers continued to pile into the CHF (one wonders what they were thinking?), thereby ‘forcing’ the SNB to continue to defend its peg by letting the printing press run 24/7.
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