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It doesn't let anything float. It's a managed "float". It's rather very simply to devalue your own currency - just run the printing press a bit more and flood

It doesn't let anything float. It's a managed "float". It's rather very simply to devalue your own currency - just run the printing press a bit more and flood the market with freshly "printed" zeroes.

greatpatton 7y ago
Doesn't always work, look at Switzerland. They keep using this strategy to minimize the impact of the strength of the CHF versus all the other currencies, and currently Switzerland is holding more than 750 billions of $ of currency reserve (only Japan and China hold more...). Desplite this, CHF is still gaining value versus all the other currencies.
- internet_user 7y ago
  CHF is a rather unique country, with a unique situation and a very unique central bank. Do you really think the SNB couldnt print a quadrillion franks tomorrow and drive it into the ground if they wanted to?
  - greatpatton 7y ago
    Yes they could but this will just destroy Swiss economy and likely create out of control inflation. Doing this is always a risky policy. SNB has told many time that they will use unlimited means to keep the value of the Swiss francs however in 2015 they had to give up on the promise to keep a 1/1.2 EUR/CHF exchange rate. What history told us is that even hedge fund (like Soros in 1992) can bring a central bank to its knees.
- notathing 7y ago
  It's weird for such a small country to have such big reserves. Why not spend some on infrastructure/whatever? Maybe they use the reserve as some sort of geo-political insurance against possible shocks (whatever those might be)
  - internet_user 7y ago
    It's not weird. They had to print many many CHFs to satisfy the demand for deposits in Switzerland. They then exchanged them for the USD they now hold. As for infrastructure/whatever, SNB then went on a massive shopping spree in equities, ~100 billion or so. They must be the absolutely best managed central bank in the world.

greatpatton 7y ago

Doesn't always work, look at Switzerland. They keep using this strategy to minimize the impact of the strength of the CHF versus all the other currencies, and currently Switzerland is holding more than 750 billions of $ of currency reserve (only Japan and China hold more...). Desplite this, CHF is still gaining value versus all the other currencies.

internet_user 7y ago
CHF is a rather unique country, with a unique situation and a very unique central bank. Do you really think the SNB couldnt print a quadrillion franks tomorrow and drive it into the ground if they wanted to?
- greatpatton 7y ago
  Yes they could but this will just destroy Swiss economy and likely create out of control inflation. Doing this is always a risky policy. SNB has told many time that they will use unlimited means to keep the value of the Swiss francs however in 2015 they had to give up on the promise to keep a 1/1.2 EUR/CHF exchange rate. What history told us is that even hedge fund (like Soros in 1992) can bring a central bank to its knees.
notathing 7y ago
It's weird for such a small country to have such big reserves. Why not spend some on infrastructure/whatever? Maybe they use the reserve as some sort of geo-political insurance against possible shocks (whatever those might be)
- internet_user 7y ago
  It's not weird. They had to print many many CHFs to satisfy the demand for deposits in Switzerland. They then exchanged them for the USD they now hold. As for infrastructure/whatever, SNB then went on a massive shopping spree in equities, ~100 billion or so. They must be the absolutely best managed central bank in the world.