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Coeure Says ECB Accepts Swiss National Bank’s Franc Cap

April 03, 2013

(Corrects story published yesterday to add dropped word in fifth paragraph.)

European Central Bank Executive Board member Benoit Coeure said policy makers “are not worried by the Swiss interventions” in currency markets.

“We don’t see negative spillovers on the euro area” from the Swiss National Bank’s currency moves, Coeure said today in a panel discussion in Washington. “It’s OK as long as it doesn’t disturb the other regions.”

The SNB’s cap on the franc is essential given that there is no threat of inflation, SNB Vice President Jean-Pierre Danthine said last month. He said the cap of 1.20 per euro is an “absolute necessity.” The Swiss franc was little changed against the euro, decreasing 0.05 percent to 1.2166 per euro as of 4 p.m. in New York.

Coeure, 44, also said that large-scale asset purchases similar to those being used by the Federal Reserve and the Bank of England aren’t a “valid option” for ECB policy makers.

“I don’t see a scope in the euro area to engineer the same kind of balance sheet expansions through outright purchase that we’ve seen in the U.S. or, say, in the U.K. in the face of fragmented financial markets, in the face of less deep and liquid mortgage markets, etc.,” Coeure said following his speech at the Peterson Institute for International Economics.

Coeure said in his remarks it would be a worry if nations openly pursued weaker currencies to bolster their economies.

“It would be a matter of concern if countries were to directly pursue overt competitive devaluations, particularly by resorting to large purchases of foreign assets,” Coeure said. “The economic literature highlights the dangers of individual countries pursuing beggar-thy-neighbor or burden-shifting policies. I believe this message is well understood by central bankers.”

‘Serious Risks’

Japanese Prime Minister Shinzo Abe said in February that buying bonds to weaken the yen won’t be necessary as the nation battles deflation, backing away from an initial proposal that prompted global concerns about currency manipulation. Coeure said such policies could “expose global markets to serious risks of an escalation of trade and financial protectionism.”

While the exchange rate isn’t a target for the ECB, the Frankfurt-based central bank takes it into consideration and could take measures to offset currency moves if they affected the inflation outlook, he said.

The exchange rate “matters for price stability and growth and, as such, it is part of the overall assessment of the appropriateness of the policy stance,” Coeure said. If it is “contrary to the objective of medium-term price stability, it may thus trigger offsetting policy actions.”

Currency Wars

Coeure spoke on a panel titled “Currency Wars and the G- 20’s Goal of Strong, Sustainable, and Balanced Growth” moderated by Peterson Institute President Adam Posen, a former Bank of England policy maker.

Prior to Coeure’s appointment to the central bank, he was chief economist at the French Treasury and its No. 2 official.

Coeure joined the Treasury in 1995 after working for Insee, France’s national statistics office. By 1999, he became head of the ministry’s foreign-exchange market and economic-policies unit, before moving on to Agence France Tresor, the nation’s debt-management body. He became its deputy chief executive in 2002 and chief executive in 2006.

To contact the reporters on this story: Jeff Kearns in Washington at; Stefan Riecher in Frankfurt at

To contact the editor responsible for this story: Chris Wellisz at

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