The franc cap and its abrupt removal

Switzerland's franc had become a magnet for safe-haven capital as the euro-area sovereign debt crisis deepened, and by mid-2011 the currency had appreciated so sharply that the SNB judged it massively overvalued and a threat to the export- and tourism-dependent economy. On 6 September 2011 the SNB announced a minimum exchange rate of 1.20 francs per euro and declared its readiness to buy foreign currency in unlimited quantities to enforce it, which it did for more than three years, swelling its foreign-currency reserves enormously in the process. By January 2015, with the euro weakening broadly against the dollar in anticipation of ECB quantitative easing, defending 1.20 would have required interventions of rapidly escalating size. On 15 January 2015 the SNB abruptly discontinued the minimum rate and simultaneously cut its policy rate to -0.75%. The franc jumped as much as 30% against the euro within minutes, and the Swiss stock market fell roughly 14% that day, its sharpest one-day drop since 1989, as exporters absorbed one of the most disruptive currency shocks in the country's modern history.