UBS’ Take On The Swiss Shocker: “The SNB’s Standing Is Undermined… There Could Be A Significant Deflationary Shock”
by Tyler Durden
ZeroHedge.com
01/15/2015
The other question is about the cost of today’s decision for the SNB, both in monetary and credibility terms. The SNB is holding roughly half of their CHF500bn in euros, which implies a loss of possibly not dissimilar to the CHF38bn that the SNB made in profit last year. The monetary impact might thus be manageable. The credibility impact might be harder to gauge though. Domestically, many economic actors relied on what was seen as a ‘promise’ to hold the 1.20 floor. Internationally, following the negative rates confusion back in December today’s decision might be further undermined the standing of the SNB among investors.
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