The franc in sight: BIS CEO sees no currency manipulation in Switzerland | 10/10/20

The financial expert explained this to the “Neue Zürcher Zeitung” on Saturday regarding such accusations.

The Swiss National Bank SNB is not pursuing any exchange rate targets at all, Carstens said. “The demand for Swiss francs is a side effect of very loose monetary policy around the world,” he said. However, the Swiss economy does not have the capacity to absorb all these inflows. “So the SNB is resisting. Currency purchases are a defensive measure,” the 62-year-old emphasized.

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At the same time, the BIS CEO praised the policy of the Swiss central bank SNB on another point. This is the inflation target of the monetary authorities. “In the case of Switzerland, you can say that it did well with the target range of 0 to 2 percent,” Carstens said. An inflation interval and not an absolute number, such as two percent, is good. It is also always critical that a central bank does not dilute its low inflation target by changing its strategy.

There is still scope for central bankers

Furthermore, Carstens sees no signs that central banks have already used up their ammunition in the coronavirus crisis with low or negative interest rates. “You might think so in terms of interest rates, but there is still enough room for maneuver,” he said. “Central banks can use their balance sheets creatively,” it was also said. In addition, communication from central banks could influence expectations about the future path of the interest rate level, Carstens said.

It is true that central banks crossed the red lines with their latest monetary policy. “But it was done with full awareness of the risks,” he said in relation to the “NZZ”. “We are here because the circumstances are very difficult,” said the BIS director general.

Basel / Bern / Zurich (awp / sda)