Ever since the 2009 panic, the Swiss have been pretending that the Euro is worth 20% more than the Swiss Franc (The Swiss still have their own currency). This isn’t true and the Swiss Central Bank has been soaking up the excess Euros.
The reason for doing this was that if they let the euro lose value, Swiss exports would cost more (and tourists visiting Switzerland). Wage pressures from immigrants would undercut the wages paid to Swiss workers.
Like Quantative Easing, making infinite Swiss Francs to buy up Euros works – until the panic starts. As the value of euros drops, the huge Swiss vault of [electronic] Euros loses value. If you try to unload them, you speed up the loss of value. Contracts or loans based in Swiss Francs will require more Euros to pay off. Profits evaporate, loans default.
The Euro and Dollar immediately lost 14% against the Swiss Franc. The tide on the beach is going out. There is little time to avoid what is coming. There may be nowhere that’s safe. This is not a drill.
Predicted in 2011 that Poland and Hungary will likely default on mortgages if Swiss drop their currency
http://www.zerohedge.com/article/swiss-franc-and-possibility-huge-mortgage-defaults-central-europe
First day casualty is a major FX broker in New Zealand is out of business. Huge losses sustained by its retail customers holding leveraged positions wiping them out completely, which wiped out the firm. That will now ripple as other firms have their counterparty and won’t be able to pay the winners who bet the Franc was going to go up