From Philipp Hildebrand, Swiss National Bank:
In order to fight the crisis, the central banks have lowered their key interest rates aggressively. The instrument of the Swiss National Bank (SNB), the repo rate, has practically reached zero. However, this certainly does not mean that the SNB is incapable of action. If needed, there are other options available. The National Bank can extend the terms of repo transactions or give consideration to the purchase of government and corporate bonds. Where necessary, the SNB may also, for example, sell an unlimited amount of Swiss francs against foreign currency in order to prevent an appreciation of the Swiss franc or even to bring about a devaluation of the national currency.
The SNB is very well aware that the determined route it is pursuing in fighting this historic crisis is associated with long-term risks. At the same time, it is firmly convinced that the risks involved in not following this course would be considerably greater. In this spirit, it is facing up to the task of fighting the crisis while at the same time maintaining a watch on the long-term aspects. At some point, the moment will come when the National Bank decision-makers will need the courage to do what is right in the long term even if it is not popular in the short term.
The SNB’s ability to act in the crisis
Handlungsfähigkeit der Nationalbank in der Krise
David:
If you get a chance read this book:
A Free Nation Deep in Debt: The Financial Roots of Democracy by James Macdonald
Sobering. Everyone is trying a mishmash of Keynes and Friedman to “do something” to stem the tide. I don’t think it will succeed, but if it does, we might have one doozy of an inflation, or perhaps some lost decades while we pick up the pieces of governments with too many liabilities — kind of like Europe’s dependent era when the Rothschilds were so powerful.
Just musing… I have always had a strong stomach for risk, but it’s getting pretty dark out there. JUst wonder what will break next.