ZURICH, March 8 The Swiss National Bank is
prepared to defend the franc from strengthening further than
1.20 per euro if tensions in Ukraine push up the Swiss currency,
Swiss National Bank Chairman Thomas Jordan told a Swiss
"We would intervene and buy unlimited quantities of foreign
currency to defend the minimum exchange rate or take other
measures if needed," Jordan is quoted as saying in an interview
with Basler Zeitung on Saturday, which also appears in Germany's
Jordan called the situation in the Ukraine, which the SNB is
carefully monitoring, a "risk not to be underestimated." But he
also noted that the SNB has not intervened in currency markets
to defend the franc since September 2012.
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
Jordan said the SNB does not rule out using negative
interest rates, in which banks essentially pay to deposit money
with the central bank.
The SNB isn't yet giving the booming Swiss housing market
the all-clear, even after reinforcing efforts to dampen surging
property prices in January.
"The pace has slowed, but we are far away from the soft
landing we want. We don't yet see the slowdown that we would
like to see," Jordan told the paper.
Real estate prices and mortgage lending have risen strongly
in Switzerland in recent years, a by-product of ultra-low
interest rates set by the central bank to lessen the appeal of
the safe-haven franc.
That leaves the SNB with a dilemma as it cannot easily raise
rates because that would clash with its policy of capping the
"Hiking interest rates is not an option in this situation.
That's why the minimum exchange rate is our primary monetary
policy instrument at the moment," Jordan was quoted as saying.
(Reporting By Katharina Bart; Editing by Hugh Lawson)