Switzerland, what a country. The safe haven par excellence and yet one which has no real reason to be so, as Izabella Kaminska noted recently.
yet the price for being a safe haven in these troubled times is a rapidly appreciating currency that threatens to bring deflation to an already slow growing Swiss economy. Their exports are dropping and even the intervention of the Swiss Central bank yesterday does not seem to have fixed perceptions.
In a time of such global instability and European Crisis, what are the Swiss to do?
Well one option is to fight the debtor countries with their own medicine. They want more Swiss francs so make them available, but not via the Banks. Instead, a reward for being Swiss, the Government should mail cheques for 5,000 CHF to every taxpayer and let them do what they like with it. After all, most will put it in a Bank and therefore it will enter the banking system, if it is spent it will ward off the internal deflationary threat.
In addition, this unsterilised monetary liquidity will warn speculators off unwarranted holding of Swiss Francs. Switzerland has monetary reserves of about 12 times the amount offered out so this should cause an 8% odd devaluation in the markets, but no doubt it will be more as Switzerland impairs its reputation for its own good.
This way, Swiss people win by getting real money to spend for free - a tax on international speculation in reality, and the Country gets its financial house in better order.