GENEVA Dec 22 Switzerland's policy of capping
the value of the franc at 1.20 to the euro will have to come to
an end in the next two or three years, a former top government
economist was quoted as saying in a newspaper interview on
The change could come about in one of two ways, Aymo
Brunetti, a University of Berne professor who was until February
this year the head of the government's economics secretariat
(SECO), told the Tages-Anzeiger newspaper.
Ideally, he said, the need for a cap on the franc would
dissolve as the euro crisis is resolved, and the Swiss National
Bank no longer has to hold down the value of the currency.
"However, this is the fair weather scenario. More realistic
is a slower exit, as the cap is gradually reduced," he said.
An alternative to abolishing the cap would be to peg the
franc against a basket of currencies.
"In that case you could remove yourself slowly from the 1.20
exchange rate," he said.
But he said that moving away from the cap would be a big
challenge and it was still too early to do so.
The cap was imposed in September 2011 when the real exchange
rate should have been 1.30-1.40 to the euro but inflation in the
eurozone means the cap is now closer to the true value, he said.
"This also means that in the next two to three years we will
have to exit the cap."
(Reporting by Tom Miles; Editing by Stephen Powell)