Rescue for citizens who have gone into debt in Swiss francs? - Swiss central bank intervenes

Growth of the Swiss francs in the last few years has increased responsibilities of citizens who have loans related to the currency by almost 50%. Remarkable growth of the currency is very unfavorable for the Swiss economy and the Swiss National Bank decided to intervene, however.

Swiss National Bank, in today's announcement, said that it believed that the Swiss franc was extremely overvalued at the moment and that it disrupted the development of economy and price stability in Switzerland. Therefore, the bank says it doesn't want to continue to tolerate these conditions and it will take measures aimed at weakening the value of franc.

The bank will start to work on reducing the three-month Libor as close to zero as possible, restricting the target value on 0.00 to 0.25% compared to the current 0.00 to 0.75%. At the same time, the Bank will significantly increase the liquidity of the Swiss franc through increased release of the money to the market over the next few days.

Also, the bank plans to increase deposits from 30 to 80 billion francs. Accordingly, the bank will not renew repurchase agreements, but it will move to the purchase of treasury bills, until it reaches the desired level of demand deposits.

The bank said that since the last quarterly assessment of monetary policy, the global economic situation has worsened. At the same time, the growth of the value of Swiss franc accelerated sharply in recent weeks, and consequently the conditions for Swiss economy have significantly deteriorated.

- Swiss National Bank will continue to closely follow developments in the market and will take further measures, if they are needed in order to weaken the value of the franc - said the statement of the bank.

These measures will come as a hand to our citizens who are charged in Swiss francs because it will reduce the interest rate (as a result of lowering the value of the three-month LIBOR) and it should be expected that in the future the value of the Swiss franc will begin to fall, which will continue to affect the amount of monthly loan.

The Swiss franc has already lost about 2% of its value related to euroat the time this article has been written.

Swiss National Bank Statement can be found at
http://www.snb.ch/en/mmr/reference/pre_20110803/source/pre_20110803.en.pdf