ZURICH Feb 21 The Swiss National Bank's cap on
the Swiss franc remains an appropriate and important monetary
policy tool, board member Fritz Zurbruegg told a newspaper on
"(The cap) was an emergency measure. And it remains
appropriate and important," Zurbruegg said in an interview that
was published on the website of Swiss newspaper Le Temps.
The SNB capped the franc at 1.20 per euro more than two
years ago to stave off recession and deflation after investors
seeking a safe haven from the euro zone pushed the unit close to
But with euro zone tensions slowly subsiding, the SNB has
not intervened to defend the cap by buying euros for francs in
more than a year. Markets have started wondering when and how
the central bank could exit this policy.
Asked whether the SNB was under pressure to abandon the cap,
Zurbruegg said: "No, even at 1.22 or at 1.23 (per euro), the
franc remains overvalued. International authorities still
understand well why the cap is necessary," he said.
Zurbruegg said that in the SNB's basic scenario, the crisis
would fade with safe-haven pressures on the franc eventually
disappearing which would cause the franc to weaken.
"In this case, nobody would talk about the cap any more. We
have to bear in mind that nobody ever announced an official exit
from the cap that was introduced in 1978," he said.
He said he was surprised the franc hadn't weakened more last
year given that uncertainties had reduced considerably.
In 1978, the SNB capped the franc against the German mark to
prevent it from rising too strongly.