Switzerland’s Currency: Shaken, Not Stirred

SWISS voters used to hold their central bank in high esteem: one survey in 2013 found the Swiss National Bank (SNB) to be their most respected national institution. That may change after its shock decision on January 15th to abandon the Swiss franc’s cap against the euro. The franc instantly shot up by 30%, provoking howls of anguish from Swiss firms. “A strong franc threatens the entire Swiss system,” shrieked one Geneva daily.The bank’s action was “a tsunami” for exporters, tourism and “the entire country”, protested Nick Hayek, chief executive of Swatch Group, the world’s biggest watchmaker, as he saw its shares plunge by 16% in a day. “Luckily I was sitting down” when the SNB called to warn of its impending announcement, said Johann Schneider-Ammann, the federal economics minister charged with trying to keep Swiss industry competitive. Exporters, he acknowledged, face a huge challenge.Swiss hoteliers are among the most fretful. Tourism is the country’s fourth-largest foreign-exchange earner after chemicals, the machine industry and watchmaking, generating about SFr35 billion (now $ 41 billion) a year and 175,000 full- and part-time jobs. Switzerland was never cheap and is now even dearer. Hotels have not reported mass cancellations but have seen a slowdown in bookings, says Véronique Kanel of Switzerland Tourism, an industry association. How bad it gets depends on where…

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