The Swiss franc's role as a safe-haven investment in times of international crisis is waning, says Swiss National Bank (SNB) chairman Jean-Pierre Roth.This content was published on November 16, 2001 - 12:16
"The Swiss franc used to be a more important safe-haven currency. With the appearance of the euro I think that something has changed," Roth said in an interview with Britain's Financial Times newspaper on Friday.
"We now have one traditional bloc of US dollars, a new bloc with the euro, and then the other currencies such as the pound sterling and the Swiss franc," Roth added.
"The size of the market has become so large that we have lost part of our importance as a diversification currency. If that means the Swiss franc is becoming less important as a financial asset and more important as a normal currency, that is good."
The SNB has made it clear that it will not stand idly by and watch speculative flows of hot money exert upward pressure on the franc, which hurts Swiss competitiveness for exports and tourism that are important to its economy.
It last cut interest rates by half a point on September 24 - its second cut in just over a week - to counter what it saw as the franc's unduly sharp rise against the euro in the wake of the September 11 suicide attacks on United States landmarks.
Roth noted, however, that the franc has been less volatile against the euro than it had been in earlier days against the German mark.
"That has been a welcome surprise. If we were to face large capital inflows we would have to respond through monetary policy and interest rates," he said.
Central bank policy
Roth reiterated earlier comments that the relative stability of the franc against the euro did not mean the SNB was shadowing the European Central Bank's (ECB) monetary policy.
"We took steps earlier than the ECB and acted more strongly in both raising and lowering interest rates," Roth added. "The reality of this country is not that different from the reality of surrounding countries."
Roth said the launch of the euro banknotes and coins next year ends the theoretical possibility that eurozone central banks could pull out of the single currency and relaunch their own national currencies.
The ECB has to stick to its prime objective of keeping prices stable if it is to successfully master changes in the eurozone that could emerge from the eventual entry of Britain or eastern European countries, he noted.
swissinfo with agencies
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