"As a consequence of the realignment of the financial centre and the planned withholding tax, we assume that a total of hundreds of billions of francs will flow out of Switzerland"
- Juerg Zeltner, head of UBS wealth management
The amount of cash Swiss commercial banks hold with nation's central bank fell slightly in the week to December 7, a sign that investors are getting less anxious over Eurozone's financial woes. Sight deposits of domestic banks declined to 292,764 million francs last week, down from 293,104 million a week earlier. At the same time, the tendency remains negative, proving that the SNB is likely to have less cash to spend to defend the 1.20 per euro cap. The reserves held by the Swiss National Bank unexpectedly dropped for a second straight month in November, adding to concerns that soon the bank will not be able to defend the 1.20 per euro cap by selling francs for other currencies, mostly euros, in order to avoid the risk of deflation and a recession.
"As a consequence of the realignment of the financial centre and the planned withholding tax, we assume that a total of hundreds of billions of francs will flow out of Switzerland," said Juerg Zeltner, head of UBS wealth management.
"The actions of the ECB have had the effect of buying some additional time for the governments and it is the governments that need to step in and take the bold, necessary, political decisions in order to restore stability," said former European Central Bank policymaker Athanasios Orphanides.
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