Tiny Liechtenstein in defence of the Swiss Franc

Utl.: The Liechtenstein Taler =

Wien/Vaduz (OTS) - With the world political and economic parameters
rapidly deteriorating, it is not surprising that the SNB is
willy-nilly forced, at an ever increasing rate, to add funds to its
super suspect Euro portfolio. This unenviable posture by a highly
competent institution is the result of a Swiss government directive,
stating that the central bank has to erect an impenetrable barrier
against the value of 1 Euro slipping under SFR 1.20.

More than 20 years have passed since representatives of the states
using the Euro as their curency, solemnly agreed the terms of the
Maastricht Treaty, to ensure within their territories "sound fiscal
policies, with the national debt limited to 60% of GDP and the annual
deficits no greater than 3% of GDP."

The conclusive evidence 20 years on, that the countries of the
Eurozone are not complying with their own rules, is that the ECB, the
creation of these selfsame partners, finds it difficult now to
dispose of its long term Euro denominated debentures. The reason
being the lack of confidence in the future of the Euro, as there is
hardly a single member of the currency union that can claim, to have
complied with the terms so solemnly sworn in Maastricht.
The Swiss finance minister can only be compared with the tragic
figure of King Canute, who set his throne on the sea shore and
commanded the incoming tide to stop, to prevent him wetting his
clothes. The fact that the sea did not comply with his command, had a
salutary effect on the giver of this preposterous order. He never
again attempted to defy the rule of nature. Owing to his subsequent
acquisition of the thrones of Britain, Denmark and Sweden, he went
down in history as the Great Cnut or Canute. So there is still hope
that the present holder of the office of the Swiss ministry of
Finance, will also eventually see the light and abandon a policy "of
attempting to stem the tide". Of course the officials of the SNB,
as all financially qualified people, are aware that there is no
escape from Gresham`s Law, according to which, bad money drives out
good money. They must have been aghast at the decision of the
government, to buy Euros of an indefinite quantity yet at a fixed
rate, just to prop up an arbitrary rate of exchange, ignoring the
fact that in a free economy only supply and demand can determine
prices or in this case currency rates and not government directives.

As a result, smart capital is now flowing into SFR, which is
considered to be undervalued,not only by the usual suspect currency
speculators but also by all holders of Euros, who are unsure about
the future of their currency.

Yet there is no reason to despair, as long as we examine the question
unemotionally.

For it is clear that every currency serves at least two separate
purposes. As a means of exchange for goods and services or as a
store of wealth. And that is the reason why, there is an alternative
to the present currency policy of the SNB, that is doomed to fail and
is bound to end in disaster.
It stands to reason that the current demand for Swiss francs is not
a sudden passion for Swiss cuckoo clocks, but rather reflects the
anxieties of investors who wish to invest their wealth in a currency
that will stand the test of time. Taking into account the double
nature of the currency, it is imperative in this case, to create a
separate Swiss investment currency, that will take off the heat from
the Swiss franc, which could then continue to be used for commercial
purposes.

As Switzerland shares its stable money, in a currency union, with
Liechtenstein, it should be no overwhelmingly difficult task, to
establish a new currency, with the title" Liechtenstein Taler", to be
traded as an investment currency for all non-residents merely on
line, who submit their identity documentation to the authorities, in
accordance with the existing compliance rules. This would result in
a twofold blessing. It would take off the pressure from the Swiss
franc further appreciating, by reducing the demand for the current
commercial SFR and provide additional business for the banks of CH &
FL.

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