Socialists want to peg franc to euro

ZURICH: Temporarily attaching the Swiss franc to the euro to stem its rise is an option worth considering the heads of Switzerland's socialist party and industry lobby Swissmem were quoted as saying on Sunday.

The Swiss franc hit a record high 1.1804 per euro on Friday, according to Reuters data, accentuating worries the strong currency may slow the Alpine country's growth in coming months.

"We do not want a permanently fixed franc exchange rate because we want to keep an independent economic policy in the long term," Christian Levrat, head of Switzerland's socialist party (SP), told newspaper Der Sonntag.

"But we need emergency measures now to smooth the developments in coming months. The Confederation needs to quickly enter talks with the European Central Bank."

Other options put forward by the SP include negative interest rates and a gentlemen's agreement with the big banks to ban speculation on the Swiss currency, Der Sonntag said.

Hans Hess, president of Swiss industry lobby Swissmem, said the Swiss National Bank should consider all options at its disposal to counter a fast appreciation of the franc, including forex intervention.

"If the euro fell to 1.10 or 1 Swiss franc within days or weeks, I would expect the SNB to do everything that makes sense to fight that trend," he said.

"The national bank has to at least consider temporarily tying the franc to the euro. It would not be the first time a country pegs its currency to that of another country in a difficult situation."

Copyright Reuters, 2011