European Union tail risks are re-aggravated – perhaps by the Italian election – or over the nature of Greece’s exit from the European Monetary Union and the worry that Spain and Portugal will follow suit. This sends capital flows surging into Switzerland once again and the Swiss National Bank and Swiss Government decide it is better to abandon the Swiss franc’s peg to the euro for a time, rather than let reserves accumulate to more than 100 percent of gross domestic product after they more than doubled to nearly two-thirds of GDP over the course of 2011 and 2012. Punitive measures and capital controls eventually brake the franc’s appreciation, but not until EURCHF has touched a new all-time low below parity after having neared parity in 2011.

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