This paper analyzes the effects of the SNB decision in different ways, based on data provided by Bloomberg and the Swiss National Bank. First, we describe the SNB's motivations for first introducing, and then later removing the cap at these particular times. Second, we specifically analyze the short and medium consequences of the SNB's decision for the Swiss Economy. Third, we show examples of how various governments, states, municipalities, companies, and private citizens who had held Swiss Franc debt were suddenly facing significant changes to interest and principal repayments. Fourth, we look into an accompanying measure the Swiss National Bank took concurrent with the removal of the cap, which was the introduction of negative interest rates.
The last part of the paper analyzes what happened to the Swiss Economy during the following years. One would expect that such a strengthening of a country's currency would severely impact the trade balance by weakening exports and increasing imports. In reality it played out differently, and we show possible reasons for these developments.
The introduction and subsequent removal of the cap by the SNB provides two rare examples of how a shock-like change from a fixed rate to a floating rate regime can affect a country's macroeconomic parameters.