Galt's Gulch

Swiss Abandon Euro

Posted by dbhalling 9 years, 10 months ago to Economics
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The Swiss are no longer going to peg their currency to the Euro. Is this the end of the Euro? Will this be the trigger for the dollar to no longer be the reserve currency? Will this be the trigger for the next financial collapse as Straight has discussed?
SOURCE URL: http://www.bbc.com/news/business-30829917

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  • Posted by freedomforall 9 years, 10 months ago
    Perhaps I am naive/ignorant, but if banks depend on customer deposits as a basis for their reserves and banks start to charge customers for holding/borrowing their funds instead of paying for those loans, wouldn't banks expect to see massive withdrawals and a corresponding reduction of their reserves?
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    • Posted by dbhalling 9 years, 10 months ago
      Makes sense to me. However, there is value to having your money in a bank even if it charges you. For instance, it is much easier and safer to pay someone using a bank transfer (check) than to drive across town with a $1000 or $10000. A bank that only does this function is called an exchange bank and one of the 1st banks in northern Europe did exactly this.
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      • Posted by khalling 9 years, 10 months ago
        search and seizure laws also unfortunately encourage that -negatively. Large amounts of cash caught on your person is a no-no. Why should you have to declare you have 10K on you? ah, thanks war on drugs
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    • Posted by freedomforall 9 years, 10 months ago
      Would this also be an opportunity for someone outside the system to provide that service and no charge for it? (Banking as a free market service, what a concept.) Who has liquid assets to do this without being in the federal system: China.
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  • Posted by Lucky 9 years, 10 months ago
    The Swiss have a reputation as not always 'nice'. But they have a good record of looking after themselves. If you cannot preserve and enhance the interests of Number One then good intentions are worthless.
    The Swiss National Bank is simply confirming that they are aware that the EU policy of 'quantitative easing' implies devaluation. Devaluation is the right measure for the EU given the state of the economy but for ideological reasons they do it by money printing rather then letting the market find the level.
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    • Posted by dbhalling 9 years, 10 months ago
      I disagree that devaluing is ever the right policy. Devaluing is a nice way of saying counterfeiting, which means stealing from you citizens.. It is also the worst kind of Government top down meddling and always helps some people at the expense of other people and always hurts the economy overall.
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      • Posted by Lucky 9 years, 10 months ago
        I agree of course,
        The right government policy is hands off, it should be the market to decide.
        For the EU, so much is wrong .. ..
        For the Swiss National Bank, that decision to upcap is correct.
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  • Posted by voodoo59 9 years, 10 months ago
    Welcome to Economics: The Video Game v2.0! Is anyone with any knowledge in a position of power anymore? I think my teenager caused this with his Ipad!
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