THE SWISS National Bank (SNB) is preparing contingency plans for a Greek exit from the Eurozone which could include capital controls, it emerged yesterday, while a leading German minister warned the country will not “pour money into a bottomless pit.”
The Lloyd’s of London insurance market also said it has reduced its exposure to the Eurozone “as much as possible” in preparation for the collapse of the single currency.
“We must be prepared just in case the currency union collapses, although I don’t expect that,” said SNB president Thomas Jordan.
The Swiss government set up a group to consider break-up scenarios, which Jordan said was focussing on instruments to fight the strength of the safe haven franc, which has soared in the Eurozone crisis.
“One measure would be capital controls, in other words measures which directly influence the flow of capital into Switzerland,” he said, without giving further details.
The franc is currently capped at 1.20 per euro, a rate set last September, though the currency remains 30 per cent above its pre-crisis level.
German interior minister Hans-Peter Friedrich increased the pressure on Greek voters to choose a pro-bailout party in next month’s elections over the weekend, telling the Leipziger Volkszeitung newspaper that he expects the country to keep its promises.
“We’re not willing to pour money into a bottomless pit,” he told the newspaper.
“Anyone who wants to see help and solidarity from us has to accept that we expect from that country a certain amount of seriousness and a certain amount of reasonableness.”
Meanwhile Lloyd’s of London boss Richard Ward told the Sunday Telegraph his firm has put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandons the euro, and that it could have to take writedowns on its £58.9bn investment portfolio if the Eurozone broke up.