Strong currency is actually a bad thing. It may be good for the individual but for the economy it sucks. We are dependent on high quality exports. Those are less effected by currency fluctuations than low quality exports but still it has an effect.
Summary of the article for the unsubscribed plebs?
Paywalled
Nice article. It mentions the decentralised economy and the job-oriented education system. But it failed to mention that the Swiss economy is massively protected by trade barriers. This is not a main factor I would say (other countries are also!) but likely an influence.
Good article overall. Really, hats off to the export industry for managing to stay so competitive despite the massive headwinds of CHF appreciation and without relying on protective tariffs.
But it fails to mention some of the drawbacks of an overvalued currency for Swiss people at large:
– Every global crisis or stock market crash hits twice as hard for CHF investors, because other currencies lose value compared to the CHF that sees a lot of influx.
– Mutinational companies have massive incentive to offshore or nearshore jobs. The CH working man is already under massive pressure due to global competition for jobs, the strong currency isn’t helping.
– Yields in CHF have been pathetically low for decades. Both short-term and long-term. This creates massive problems for pension funds and people trying to save for retirement.
– Related to the above point: 15 years of negative interest has completely distorted the housing market. And after raising rates to 1.75% two years ago and giving us hope for some normalization, the SNB has in the meantime already wasted most of its gunpowder and is about to introduce negative interest rates again.
– The SNB in its attempts to devalue the currency has accumulated an astronomically large balance sheet.
The *could* be a silver lining here: The low interest rates could allow the government to raise cheap capital and make much needed investments into defense, infrastructure and housing. But the government is too cheap for that too, so we’re just further reducing debt (mostly for ideological reasons) and implementing austerity measures instead.
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Strong currency is actually a bad thing. It may be good for the individual but for the economy it sucks. We are dependent on high quality exports. Those are less effected by currency fluctuations than low quality exports but still it has an effect.
Summary of the article for the unsubscribed plebs?
Paywalled
Nice article. It mentions the decentralised economy and the job-oriented education system. But it failed to mention that the Swiss economy is massively protected by trade barriers. This is not a main factor I would say (other countries are also!) but likely an influence.
un-paywalled: [http://archive.today/wNUQS](http://archive.today/wNUQS)
Good article overall. Really, hats off to the export industry for managing to stay so competitive despite the massive headwinds of CHF appreciation and without relying on protective tariffs.
But it fails to mention some of the drawbacks of an overvalued currency for Swiss people at large:
– Every global crisis or stock market crash hits twice as hard for CHF investors, because other currencies lose value compared to the CHF that sees a lot of influx.
– Mutinational companies have massive incentive to offshore or nearshore jobs. The CH working man is already under massive pressure due to global competition for jobs, the strong currency isn’t helping.
– Yields in CHF have been pathetically low for decades. Both short-term and long-term. This creates massive problems for pension funds and people trying to save for retirement.
– Related to the above point: 15 years of negative interest has completely distorted the housing market. And after raising rates to 1.75% two years ago and giving us hope for some normalization, the SNB has in the meantime already wasted most of its gunpowder and is about to introduce negative interest rates again.
– The SNB in its attempts to devalue the currency has accumulated an astronomically large balance sheet.
The *could* be a silver lining here: The low interest rates could allow the government to raise cheap capital and make much needed investments into defense, infrastructure and housing. But the government is too cheap for that too, so we’re just further reducing debt (mostly for ideological reasons) and implementing austerity measures instead.
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