Why Switzerland should have listened to Hong Kong on currency pegs

The Swiss National Bank usually ticks away as quietly as one of its nation’s more expensive timepieces, but when the cuckoo does occasionally burst out of the clock, all hell breaks loose. After a policy was introduced in September 2011 to depress the Swiss franc against the euro (as traumatised investors continued to pour money into safe-haven Switzerland), governor Philipp Hildebrand resigned when it came to light that his wife Kashya had sold a huge bundle of francs ahead of her husband’s market intervention, then bought them back at a handsome profit.

Now, weeks after Hildebrand’s successor Thomas Jordan called the informal fixing of the franc at €1.20 ‘absolutely central’ to his bank’s strategy, the peg has been removed — causing the Swiss currency to soar to €0.85 before settling around one to one. Some brokers, hedge funds and speculators (Mrs Hildebrand has not revealed her position this time round) have taken caning losses, while Swiss stocks have plunged in anticipation of weaker exports and reduced growth.