Swiss bank buys up German debts

The Swiss National Bank (SNB) is buying up German debts to protect the Swiss franc and the country's exports. The move provides some much-needed backing for the German economy.

Swiss bank buys up German debts
Photo: DPA

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.

The Local/bk

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Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

READ ALSO: France and Germany push for compromise on eurozone reform