Swiss Franc Essay

Improved Essays
Show More
1. Appreciation of the Swiss franc
1.1 Causes

The global financial crisis led to a significant weakening in economic growth. The worldwide recession hit almost every country and financial uncertainty was dominating the markets. This has mainly happened due to the insolvency of many system-relevant financial firms, such as the Lehman Brothers, Fannie Mae & Freddie Mac. The franc has been permanently revaluated since 2008.

1.2 Measures against the strength of the Swiss franc
After the SNB had almost completely exhausted the interest margin by means of liquidity-providing repo transactions and foreign currency swaps 14 , in 2009 it took "unconventional measures" 15 to increase the degree of expansion of monetary policy. Because the immense …show more content…
5 & Fig. 6), making the euro more unattractive and increasingly pressure on the lower limit 1.20 CHF per euro was …show more content…
5 & Fig. 6), making the euro more unattractive And pressure on the lower limit of CHF 1.20 per euro has been exerted.31 "Under-utilization" 36 of production factors due to falling demand for Swiss goods abroad. Declining profit margins would force companies to become more efficient, leading to layoffs and pressure on wages. If such a phase were to continue for a longer time, this process and the country would fall into a recession.37 In these circumstances, the SNB saw itself forced to act in 2011 to meet its legal obligations to maintain price stability and to take account of " .

Related Documents

  • Improved Essays

    Similarities Between The Great Depression And Black Tuesday
    • 701 Words
    • 3 Pages

    Similarities Between The Great Depression And Black Tuesday

    In many cases, two-thirds of the stock purchased was on credit. The stock market value was greater than all the combined currency issued value. In addition, savings were lost, or only paid at cents on the dollar, when depositor’s money were lost by investment banks. That created bank runs on banks still operating. People horded cash and gold, putting it in hiding places instead.…

    • 701 Words
    • 3 Pages
    Improved Essays
    Read More
  • Improved Essays

    Gold Standard Dbq
    • 1634 Words
    • 7 Pages

    Gold Standard Dbq

    They began to print money and lowered the value of their currencies even more, which lead to the creation of the Bretton Woods…

    • 1634 Words
    • 7 Pages
    Improved Essays
    Read More
  • Improved Essays

    Panic Of 1819 Causes
    • 306 Words
    • 2 Pages

    Panic Of 1819 Causes

    Some of the causes were the poor management of banks, too many banks that issued a lot of banknotes, easy credits were given to high-risk debtors like farmers, a shortfall on trade in the U.S.…

    • 306 Words
    • 2 Pages
    Improved Essays
    Read More
  • Improved Essays

    Stock Market Crash Of 1929 Research Paper
    • 769 Words
    • 4 Pages

    Stock Market Crash Of 1929 Research Paper

    Indirectly, this caused lots of banks to declare bankruptcy. This was also considered as the signal of the start of the Great Depression, which negatively influenced almost all western industrialized countries for next ten years. The main reason for the crash of the market could be blamed on the increasing…

    • 769 Words
    • 4 Pages
    Improved Essays
    Read More
  • Decent Essays

    Great Depression Pros And Cons
    • 259 Words
    • 2 Pages

    Great Depression Pros And Cons

    As a result, many investors went bankrupt and banks were forced into insolvency. As many people feared of economic downturn, the overall spending was reduced, leaving…

    • 259 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Compare And Contrast The Great Depression And 1930s
    • 1078 Words
    • 5 Pages

    Compare And Contrast The Great Depression And 1930s

    Since the Great Depression in the 1930s the United States had not experienced a severe recession, until 2008. Many historians and economists debate over whether the economy was slipping into a double dip recession, but there is also a noticeable amount of evidence that the economic crisis America experienced in 2008 was in fact worse than the 1930s. I will examine all aspects of both, the Great Depression of the 1930s and the recession that occurred in 2008, comparing their similarities and differences of their effects on various aspects of America. The Great Depression was the largest economic collapse of the twentieth century.…

    • 1078 Words
    • 5 Pages
    Improved Essays
    Read More
  • Great Essays

    Postwar Tony Judt Summary
    • 1368 Words
    • 5 Pages

    Postwar Tony Judt Summary

    This snake system only lasted a couple of years, until it was proposed to create the European Monetary System (EMS). “It would set up a grid of fixed bilateral exchange rates, linked by a single unit of measure, the European Currnecy Unit (the écu5) , this was the first actual step into becoming a more united Europe economically. After the EMS and écu were not as successful as successful as hoped, based on their lack of universality, “the next logical step was the replacement of national currencies by the euro, for all its disruptive symbolic implications” . This for Tony Judt is the idea that the creation of the euro was not a calculated strategic move on the road to a more successful economy, but rather it was the outcome of pragmatic responses to the European economic problems. Some countries, as Judt points out, were dubious about joining a system such as the Euro, an example hat we are given is how some nations, such as Sweden “were transformed from an independent nation to a sort of province within an expanding superpower, therefore becoming simply little more than an advisory panel” .…

    • 1368 Words
    • 5 Pages
    Great Essays
    Read More
  • Great Essays

    Pros And Cons Of Fractional Reserve Banking System
    • 1453 Words
    • 6 Pages

    Pros And Cons Of Fractional Reserve Banking System

    Do you ever wonder where your money goes after it’s deposited in the bank? Has it ever crossed your mind how banks can afford to stay open? Well, after my research on the Fractional Reserve Banking System, I’ve learned a lot about where our money goes and how banks can afford to keep their doors open. There are many different systems put in place by the Federal Reserve Market Committee such as Open Market Operations, Federal Funds Target Rate, and the Discount Target Rate. The nature of the Fractional Reserve Banking System allows banks to use their customers cash as loans to other customers in order to stimulate the economy.…

    • 1453 Words
    • 6 Pages
    Great Essays
    Read More
  • Decent Essays

    Money Supply Achievable For The Federal Reserve
    • 287 Words
    • 2 Pages

    Money Supply Achievable For The Federal Reserve

    The increasing and decreasing of excess reserves makes meeting the money supply achievable for the Federal Reserve. These Reserves help control the commercial banks money supply. Consequently Federal Reserves are a liability because, of the claims commercial banks may have against them for funds that are owed. The banks are under the assumption that the funds of an individual receiving a loan approval will not remain in a debtors account.…

    • 287 Words
    • 2 Pages
    Decent Essays
    Read More
  • Superior Essays

    Inflation In Canada
    • 1208 Words
    • 5 Pages

    Inflation In Canada

    At this time, the government needs to decrease the money supply as it helps slow down the economy and will help prevent another…

    • 1208 Words
    • 5 Pages
    Superior Essays
    Read More
  • Improved Essays

    Federal Monetary System
    • 763 Words
    • 4 Pages

    Federal Monetary System

    This is the reason why we have the Federal Open Market Committee that meets every 6 weeks to discuss the changes to the monetary policy; it consists of Board of Governors, chairman and 6 Fed Reserve Bank Presidents. It is quite important that the Fed changes the Federal Funds rate by altering the supply of money. Now let's think about the tools of the Monetary Control, first we have the discount rate, which is an overnight interest rate the Feds charges member banks for borrowed money, in the situation when there is an increase in money supply, the decrease in the discount rate encourages banks to borrow excess reserves, so money supply grows through money multiplier and lending by the banks. If we have a decrease in money supply in the economy, there is an increase in the discount rate, which automatically discourages banks to borrow excess reserves, they make fewer loans, money supply…

    • 763 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Milton Friedman Monetary Policy Summary
    • 1049 Words
    • 5 Pages

    Milton Friedman Monetary Policy Summary

    Woodfords (2003) said “the monetary policy is disciplined by clear rules intended to ensure a stable standard of value, rather than one that is determined on a purely discretionary basis to serve whatever ends may seems most pressing at any given time.” Moreover, the monetary authorises should avoid sharp swing in the policies because it can affect an economy stability. This article has the capability to alter people’s view on monetary policy. Someone who is biased or naïve in thinking that the role of the monetary policy is still about the gold standard can easily be conceived that the monetary policy does play other roles in order to achieve sustainable growth for an economy. Also a reader that is of the same view of the author will enjoy reading the article because it educates the public and the monetary authorities in what the monetary policy can and cannot do and how should the monetary authorises conduct the monetary policy to obtain economy stability.…

    • 1049 Words
    • 5 Pages
    Improved Essays
    Read More
  • Superior Essays

    Interwar Period Of Economic Crisis
    • 1902 Words
    • 8 Pages

    Interwar Period Of Economic Crisis

    Financial Crisis The global economy has adopted many different international monetary structures to stabilize economies. States struggle to decide between a combination of two of three major monetary objectives - capital mobility, fixed exchange rates, and sovereign monetary policy. The global economy has adopted several forms in recent history, however, these structures have been conducive to financial crises. The collapse of the Gold Standard, the Interwar Period, the collapse of the Bretton Woods system, and the 2007-2010 recession have all been crises that have shaped the international monetary structures.…

    • 1902 Words
    • 8 Pages
    Superior Essays
    Read More
  • Improved Essays

    Canada Exchange Rates
    • 829 Words
    • 4 Pages

    Canada Exchange Rates

    The soundness of the Canadian dollar and the health of the economy means keeping the domestic inflation, stable, low and predictable. The Central Bank of the United Arab Emirates implements and formulates banking and monetary policies ensuring growth of the UAE economy. Their focus is to maintain a fix exchange rate against the U.S. dollar. This will ensure a free convertibility into foreign currencies. The Central Bank of the Bahamas exchange rate is fundamental to the monetary policy of the bank.…

    • 829 Words
    • 4 Pages
    Improved Essays
    Read More
  • Superior Essays

    Simultaneous Targeting Of The Money Supply And Interest Rates
    • 1183 Words
    • 5 Pages

    Simultaneous Targeting Of The Money Supply And Interest Rates

    Money supply (MS) is controlled by central bank, depositors, borrowers, and depository institutions. The central banks contribution to the determination of the money supply is through the control they have on the monetary base (MB). Monetary base is the currency in circulation plus reserves, both which fall under the central bank’s liabilities but are on the asset side of other banks balance sheets. The importance of the monetary base on the money supply is that when the monetary base is increased, it will increase the money supply. In the reverse, a decrease in the monetary base will decrease the money supply.…

    • 1183 Words
    • 5 Pages
    Superior Essays
    Read More

Related Topics

Ready To Get Started?
Discover
Company
Follow
©2024 Cram.com
Privacy Policy |  Cookie Policy |  About Ads |  Site Map |  Advertise  | 
  • Cookie Settings