Central Bank Shocks - What next? (Bilingual)

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On 15 January 2015, the Swiss central bank, i.e., the Swiss National Bank (SNB), dropped its three-year old cap or peg at 1.20 Swiss francs (SFr) per .....

Summary

On 15 January 2015, the Swiss central bank, i.e., the Swiss National Bank (SNB), dropped its three-year old cap or peg at 1.20 Swiss francs (SFr) per euro. The SNB maintained that the exchange rate peg was only a transitional policy to allow the economy to adapt to a strengthening currency. The move by the SNB, which created a rout on the currency markets, has led to fears as to whether central banks may have turned into a potentially destabilizing force.
 
A thought is gaining ground that the SNB move was more political in nature rather than economic. If so, it is something that policy makers have to factor in, in terms of future moves likely to be made by central banks. In the climate of monetary-policy divergence globally, with the American Federal Reserve reportedly thinking about increasing interest rates while the ECB and Bank of Japan are moving in the other direction, central banks are likely to come under more confusion as cooperation falters.

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Central Bank Shocks - What next? (Bilingual)

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