The Swiss just abandoned their Euro ceiling

[ingemann]

So what impact on the European economy will this have.  I imagine this will have an impact on Swiss tourism due to the higher prices in Switzerland, but does this destabilize the Euro in general?

It impowerish some people (as example many in Poland have taken loans in Swiss Francs, because the strong Polish Zloty versus the Euro made this a good deal, it's no more) who have borrowed money in Swiss Francs, but for the Euro it means very little, yes it makes the Euro slightly weaker, but it's really by a small margin, and honestly the Euro is too strong right now. This would have been a problem or a good thing if Switzerland had been 10 times bigger.

[ingemann]

Meanwhile, the franc shock has apparently claimed his biggest victim: The US hedge fund Everest Capital Global with $830 million in assets went bankrupt after the Swiss National Bank scrapped its three-year-old cap on the franc against the euro. According to the "Wall Street Journal" the speculative fund had laid large-scale bets on a devaluation of the franc - exactly the opposite happened.

I can understand why some would think the cap would be maintained, but that anyone would think it would be lowered?

I was going post this yesterday because it seems like such a dumb idea that I would never have expected to happensure anymore. Could it be an even more extreme form of currency manipulation than China to make its banks assets worth more in francs if they were effectively all Euro? Or more simplisticly increase exports? I don't know why a country like Switzerland would take either of those views (but then again, the initial peg was surprising).

As I understand it, it make some sense if the ceiling had been kept, the Dollar are rising against the Euro, with Swiss Franc hitting the ceiling, this would have meant that Swiss Franc fell compared to the Dollar, if the Swiss had kept the ceiling. Economist here can tell me, if I'm completely wrong.