Right despite risks

The Swiss National Bank (SNB) will receive due praise for pegging the Swiss franc to the euro, the liberal-conservative Neue Zürcher Zeitung predicts: "Nevertheless, no monetary policy based on exchange rates can be entirely without risk. The real test will come if new upheavals on the international markets lead to enormous capital flight, or if investors start having doubts about the SNB's will to defend a rock-bottom exchange rate with every means at its disposal. In that case the SNB could become a huge state-run investment fund taking enormous exchange risks and obliged to abandon its inflation targets. Luckily however this measure is only temporary. Ideally the international markets and stock exchanges will calm down again and the SNB can return to its traditional monetary policy before any future major upheavals. In that case the board can be sure to receive undivided accolade for these risky yet necessary measures taken at the right time."

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