Swiss central bank promises to act to defend cap on the franc

City A.M. Reporter
THE SWISS National Bank yesterday dangled the threat of capital controls to hold down the value of the franc if the Eurozone crisis escalates, days before a Greek election that could drive another flood of money into the safe-haven currency.

The central bank said it was determined to defend a cap of 1.20 per euro it imposed in September and was ready to buy foreign currency in “unlimited quantities”.

“Even at the current rate, the Swiss franc is still high. Another appreciation would have a serious impact on both prices and the economy in Switzerland,” SNB chairman Thomas Jordan said.

“The SNB will not tolerate this. If necessary it stands ready to take further measures at any time.”

The SNB had to expand its forex reserves by nearly a third to make the cap stick last month, as fears rose of a Greek exit from the euro.