"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 held with nation's central bank fell more than expected in the week to January 4, a sign that investors are getting more anxious over Eurozone's financial woes. Sight deposits of domestic banks dropped to 282 640 million francs last week, down from 288 526 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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