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Swiss bank buys up German debts

The Swiss National Bank (SNB) is buying up German debts to protect the Swiss franc and the country's exports. The move provides some much-needed backing for the German economy.

Published: 8 August 2012 12:50 CEST

Swiss bank buys up German debts

Photo: DPA

Switzerland is trying to prevent the appreciation of the Swiss franc amid the euro crisis, to protect its own export business.

To that end, the Swiss central bank recently increased the country’s reserve by 11 percent to 406.5 billion francs, despite inflation fears.

New figures suggest that much of this new money is flowing into German debts, the German edition of the Wall Street Journal reported on Wednesday.

“A majority of the July increase in the reserve is connected with the purchase of foreign currency to protect the lower limit of the euro-franc exchange rate,” said SNB spokesman Walter Meier.

Last September, the SNB introduced a limit of 1.20 francs to the euro, after the two currencies were threatening to gain parity.

The SNB is now keeping 60 percent of its currency reserves in euros, with the lion’s share of 85 percent invested in government bonds. This move is good news for the German government as it tries to shore up its own finances in the face of the ongoing euro crisis.

The Local/bk

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Three scenarios: How Switzerland plans to fight a Covid resurgence

Authorities want to prevent overcrowded hospitals if new wave comes. Photo by Fabrice Coffrini / AFP

Although Switzerland relaxed a number of coronavirus rules from June 26th and 28th, “the pandemic is not over”, as Health Minister Alain Berset said at a press conference on Wednesday.

Berset said Switzerland should not become complacent, with last summer a warning against feeling that the battle is won.

He added, however, that the new wave is unlikely to be as large as the previous ones due to the country’s vaccination campaign.

This situation leaves a degree of uncertainty for which the government wants to be prepared as well as possible, Berset noted.

The Federal Council established a “just-in-case” procedure on Wednesday for three possible scenarios that could take place in the autumn and winter.

These plans focus mainly on the rapid detection of variants and the continuation of vaccination, testing, and tracing.

The best-case scenario: status quo

In this scenario, the number of cases remains at a low level, though small outbreaks are still possible.

The number of infections may increase slightly due to seasonal factors — the virus is known to spread slower in summer and faster in autumn and winter— but does not place a significant burden on the health system.

If this happens, no measures beyond those already in place would be necessary.

READ MORE: ANALYSIS: Is Switzerland lifting its Covid-19 restrictions too quickly?

Not so good: more contaminations

In this second scenario, there is an increase in the number of cases in autumn or winter.

There may be several reasons for this, for example the large proportion of unvaccinated people, seasonal effects — people tend to stay indoors together in cold weather, and contaminations are easier — or the appearance of new, more infectious variants.

This situation could overburden the health system and require the reintroduction of certain measures, such as the obligation to wear a mask outdoors.

Booster vaccinations may also be necessary.

The worst: new virus mutations

In scenario three, one or more new variants appear, against which the vaccine or the post-recovery immunity are less effective or no longer effective.

A new wave of pandemic emerges, requiring strong intervention by the public authorities and a new vaccination.

Which of the three scenarios is most likely to happen?

The government hasn’t said, but judging by the comments of health officials, the latter two are the strongest contenders.

Firstly, because the highly contagious Delta mutation, which is spreading quickly through many countries, is expected to be dominant in Switzerland within a few weeks.

It is expected that the virus will spread mostly to those who are not vaccinated and, to a lesser degree, to people who have only had one shot of the vaccine, according to Andreas Cerny, epidemiologist at the University of Bern

READ MORE: How Switzerland plans to contain the Delta variant

Another concern is related to the appearance of the new variants which could be as or possibly even more contagious than Delta and not as responsive to the current vaccines.

The government said the best chance of avoiding the second or third scenarios is to ensure people are vaccinated.

“Widespread vaccination of the population is crucial to relieve the burden on the healthcare system and to manage the epidemic. A possible increase in the number of coronavirus cases in the autumn will largely depend on the proportion of the population that has been vaccinated,” the government wrote in a press statement.

The government has also indicating it is preparing for booster vaccinations to take place in 2022 and are encouraging cantons to keep their vaccine infrastructures in place.

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