>They do this because to peg the currency to the Euro meant they had to buy an unlimited amount of foreign currency to make up for it, which gets very expensive

>They do this because to peg the currency to the Euro meant they had to buy an unlimited amount of foreign currency to make up for it, which gets very expensive in the long run. It's the reverse situation that is typically unsustainable from an expense perspective (as the Central Bank of Russia has been dealing with). To prevent the CHF appreciating, the SNB creates the CHF it uses to buy EUR to defend the peg. There is no theoretical limit on the amount of CHF they can create in this process as they are creating new money. The key issues are that: 1) The CHF has depreciated significantly on a trade weighted basis since the peg is only against the EUR (which has depreciated substantially against the USD). 2) The monetary base has reached 60% of GDP as a result of the high demand of CHF at the artificially low price (and getting lower given continuing EUR depreciation) and continues to grow. There is much speculation, but most market professionals agree that the timing is due to the expected imminent QE by the ECB and the likely implications for the above two factors.