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Monthly Archives: January 2015


Central Bankers have a license to lie

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On thursday we witnessed the removal of the swiss franc – euro cap that was in place for the last 3 tears. That is perfectly ok, however it is not ok how this was done and the background on the story.

On Monday (12.01) the SNB vice-chairman Jean-Pierre Danthine said in an interview that “We took stock of the situation less than a month ago, we looked again at all the parameters and we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy”.

On Thursday (15.01) the SNB decided to remove the cap and took the markets by surprise, sending the franc as much as 25% up in the day against most major currencies. As Anatole Kaletsky said on CNBC, it looks that the central bankers are the only public officials with the license to lie in public without any repercussions.

Currency rates affect many things and many people rely on central bank policy predictability – export industries , tourism, foreigners that have loans in swiss francs and so on. So such U-turns in the policy does not affect only “evil speculators” but also regular people.

Such actions by central bankers undermine the trust in the whole financial system – if swiss bankers say something and do the opposite, should we even listen to Yellen, Draghi or Carney? Think twice the next lime, you listen about rates, unemployment, growth, inflation especially if your “source” is FED, ECB etc.