Swiss National Bank sets minimum exchange rate at CHF 1.20 per euro

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.

Even at a rate of CHF 1.20 per euroThis is the name of the European Union (EU) single currency, although it has only been adopted by 16 of the 27 Member States so far. The United Kingdom, Denmark and Sweden, as well as Bulgaria, Estonia, Lithuania, Poland, Hungary and the Czech Republic, have retained their traditional national currency for the time being.

Apart from these 16 EU member states, the euro zone also includes non-EU countries that have adopted the euro, for example, Andorra, Montenegro, Kosovo, San Marino and Vatican City.

The euro has been in existence since 1st January 1999 as a notional currency; the exchange rates of the currencies in the participating states have been irrevocably fixed since this date, both in relation to each other and the euro. Euro notes and coins have been in circulation since 1st January 2002.

The euro applies within the framework of what is known as the European Economic and Monetary Union (EMU). Only EU states meeting certain convergence criteria are able to join this monetary union. The criteria used include targets on permissible levels of inflation and interest rates, national debt, and a problem-free participation in the European Monetary System (EMS - the system designed to stabilise the exchange rates of the EU states’ currencies). Compliance with these criteria is checked on a regular basis as part of a wider mechanism for coordinating and monitoring national economic policies. The aim is to guarantee the highest possible level of price stability in the EU states covered by the EMU. The European Central Bank also has a duty to ensure that this aim is achieved. This body has been responsible for monetary policy instead of the national central banks since the euro was introduced., the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.