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Swiss bank buys up German debts

The Local · 8 Aug 2012, 12:50

Published: 08 Aug 2012 12:50 GMT+02:00

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Switzerland is trying to prevent the appreciation of the Swiss franc amid the euro crisis, to protect its own export business.

To that end, the Swiss central bank recently increased the country's reserve by 11 percent to 406.5 billion francs, despite inflation fears.

New figures suggest that much of this new money is flowing into German debts, the German edition of the Wall Street Journal reported on Wednesday.

"A majority of the July increase in the reserve is connected with the purchase of foreign currency to protect the lower limit of the euro-franc exchange rate," said SNB spokesman Walter Meier.

Last September, the SNB introduced a limit of 1.20 francs to the euro, after the two currencies were threatening to gain parity.

The SNB is now keeping 60 percent of its currency reserves in euros, with the lion's share of 85 percent invested in government bonds. This move is good news for the German government as it tries to shore up its own finances in the face of the ongoing euro crisis.

Story continues below…

The Local/bk

The Local (news@thelocal.de)

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Your comments about this article

17:47 August 8, 2012 by zeddriver
Funny how my parents always told me. The best way to protect your future financial position was to not borrow so much. Only in these modern times is borrowing money considered improving your finances.
18:21 August 8, 2012 by smart2012
this is the hypocrisy of this situation.. but not sustainable due to again decreased manufacturing production in Germany in June (-0.8% versus previous months, - 0.3% on annual bases)
23:08 August 12, 2012 by grazhdanin
Crisis, crisis, crisis. I wasn't aware there was a crisis if it hadn't been mentioned.
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