Less than two months after the Swiss National Bank lobbied to defeat the Save Our Swiss Gold initiative that would have required it to hold 20% of their reserves in gold, the SNB unexpectedly announced that it was dropping its support of the 1.2 to 1 Franc/Euro peg today.

The SNB also announced a lowering of the interest rate for sight deposits to -.75%.

The Save Our Swiss Gold initiative would have made it difficult for the SNB to continue to support the Franc/Euro peg as the SNB would have been required to acquire abut 1,500 tons of gold or more to meet the requirements of the initiative while also printing Francs to support the Franc/Euro peg.

Even with out the gold requirement of the Save Our Swiss Gold initiative, maintaining the Franc Euro peg proved too expensive for the SNB, and was dropped.

The Euro has been under pressure in recent months as an exit by Greece from the Euro zone has become a possibility and the ECB has been toying with the idea of launching its own quantitative easing program.

Developing…

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