"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 foreign currency reserves held by the Swiss National Bank fell for the second consecutive month in January, a sign that pressure on the Swiss Franc eased. The report by Zurich-based Swiss National Bank showed that holdings declined to 427 billion francs, down from 427.2 billion francs in December. Economists, however, expected holding to rise to 428.3 billion francs by the end of January. The latest data are adding to concerns that soon the bank will not be able to defend the 1.20 per euro cap, which was introduced in September 2011, by selling francs for other currencies, mostly euros, in order to avoid the risk of deflation and a recession. Earlier this week, the SNB board member Fritz Zurbruegg pledged bank's readiness to maintain the cap in 2013.
"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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