-Matthew Hassan, Westpac senior economist
It seems that we can forget about any shift or action from the SNB in the coming years, as the Swiss Franc is now under the significant pressure, as the ECB added more stimulus several weeks ago. During its quarterly meeting, the Zurich-based central bank, under the leadership of Thomas Jordan, held its cap on the Swiss Franc at 1.20 per euro, while its target range for three-month LIBOR was also unrevised at zero to 0.25%, widely meeting analysts' expectations. The central bank imposed a cap in September 2011 at the height of the Eurozone financial crisis to protect the Alpine economy from deflation and economic stagnation. While the SNB has not intervened financial markets for almost two years, the Swiss Franc failed to fall as it was predicted by the central bank, due to weak inflation and subdued growth in the 18-nation bloc.
The annual report also showed that the SNB admits there is a progress by the country's largest banks, however, also warned more needs to be done in order to assure future financial stability. For instance, the UBS AG and Credit Suisse Group AG should both continue improving their capital positions, especially keep a close eye on their leverage ratios, which are key measures of stability and reflect the amount of capital commercial bank has on hand relative to its investments and loans.
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