Swiss central bank spends billions on cap

Tim Wallace
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THE SWISS National Bank’s (SNB) foreign currency holdings hit record levels in May, the central bank revealed yesterday, as it fights to maintain the franc’s cap – a struggle made more difficult every time the Eurozone crisis flares up.

The SNB said its reserves now stand at 303.8bn Swiss f rancs (£204.7bn), up roughly one quarter on the 237.6bn it held in April.

In the autumn the central bank pledged to hold the franc at €1.20, fighting the rapid inflow of euros from troubled neighbours.

Capital flight into the country made currency soar, threatening the country’s economy as the strong franc makes it very difficult for Swiss exporters to compete with rivals in other countries, particularly those based in the Eurozone.

The level of intervention may have to increase even further in coming months if the crisis intensifies any more, with a Greek exit now a possibility.