Switzerland is the first country to leave the euro, but it might not be the last.
Of course Switzerland is not a member of the euro, but the Swiss National Bank’s (SNB) decision on January 15 to remove the enforced ceiling of 1.20 Swiss francs (CHF) per euro essentially demonstrated the tax haven country’s complete loss of faith in the currency that it has been pegged to for the last three years.
The main reason for the SNB’s decision is that in order to maintain a low Swiss franc against the euro, the SNB had to sell its franc reserves and buy euros. This led to large increases on the euro reserves they held. In other words, as any private individual might have done, the SNB decided to take its loss on the EUR and quit the game.
2015 will go a long way to determining the future of the single currency.
Firstly, there is the controversial programme of quantitative easing (QE). QE would see investors flee from the euro to park their money somewhere safer. It is seen by many as the last throw of the dice to rescue the eurozone, by a central bank bereft of ideas.
Added to this, the euro faces Greek and Spanish elections this year, whose results may well see far-left, anti-austerity parties assume power. The Spanish political establishment, and the European Union (EU) will nervously look to the Greek election later this month as an indicator of what may come for Spain at the end of the year.
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