<p>From <a href="http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-13" rel="nofollow noreferrer">the Economist</a>:</p>

<blockquote>
  <p>The SNB suddenly dropped the cap last week for several reasons. First, many Swiss are angry that the SNB has built up such large foreign-exchange reserves. Printing all those francs, they say, will eventually lead to hyperinflation. Those fears are probably unfounded: Swiss inflation is too low, not too high. But it is a hot political issue. In November there was a referendum which, had it passed, would have made it difficult for the SNB to increase its reserves. Second, the SNB risked irritating its critics even more, thanks to something that is happening this Thursday: many expect the European Central Bank to introduce “quantitative easing”. This entails the creation of money to buy the government debt of euro-zone countries. That will push down the value of the euro, which might have required the SNB to print lots more francs to maintain the cap. But there is also a third reason behind the SNB’s decision. During 2014 the euro depreciated against other major currencies. As a result, the franc (being pegged to the euro) has depreciated too: in 2014 it lost about 12% of its value against the dollar and 10% against the rupee (though it appreciated against both currencies following the SNB's decision). A cheaper franc boosts exports to America and India, which together make up about 20% of Swiss exports. If the Swiss franc is not so overvalued, the SNB argues, then it has no reason to continue trying to weaken it.</p>
</blockquote>

<p>I have only several things to add to this commentary, all contained <a href="https://economics.stackexchange.com/a/3082/2732">here</a>.</p>

CC BY-SA 3.0
2015-01-19T15:22:13.777Z
2015-01-19T19:57:38.027Z
2017-04-13T12:51:38.253Z
zkurtz
<p>The title says it all.  Why did the Swiss National Bank end the currency peg?  The issue obviously has many aspects, so I'm looking for a concise summary with references to explanations for each of those crucial aspects.</p>

<central-banking><currency-peg>
Why did the Swiss National Bank end the currency peg?
zkurtz
# Why did the Swiss National Bank end the currency peg?

(Asked by: username_0 on 2015-01-19)

The title says it all. Why did the Swiss National Bank end the currency peg? The issue obviously has many aspects, so I'm looking for a concise summary with references to explanations for each of those crucial aspects.

**Tags:** central-banking, currency-peg

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## 1 answers

### Answer by username_0 on 2015-01-19. Score: 4

From [the Economist](http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-13):

> The SNB suddenly dropped the cap last week for several reasons. First, many Swiss are angry that the SNB has built up such large foreign-exchange reserves. Printing all those francs, they say, will eventually lead to hyperinflation. Those fears are probably unfounded: Swiss inflation is too low, not too high. But it is a hot political issue. In November there was a referendum which, had it passed, would have made it difficult for the SNB to increase its reserves. Second, the SNB risked irritating its critics even more, thanks to something that is happening this Thursday: many expect the European Central Bank to introduce “quantitative easing”. This entails the creation of money to buy the government debt of euro-zone countries. That will push down the value of the euro, which might have required the SNB to print lots more francs to maintain the cap. But there is also a third reason behind the SNB’s decision. During 2014 the euro depreciated against other major currencies. As a result, the franc (being pegged to the euro) has depreciated too: in 2014 it lost about 12% of its value against the dollar and 10% against the rupee (though it appreciated against both currencies following the SNB's decision). A cheaper franc boosts exports to America and India, which together make up about 20% of Swiss exports. If the Swiss franc is not so overvalued, the SNB argues, then it has no reason to continue trying to weaken it.

I have only several things to add to this commentary, all contained [here](https://economics.stackexchange.com/a/3082/2732).


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