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'The scale of Switzerland’s task in holding down the franc became even clearer Monday, as the currency held firm even as the Swiss National Bank warned it could introduce capital controls to hold it down if the crisis in the neighboring euro area deteriorated further.

The safe-haven franc — a magnet to investors in times of stress — dipped only very slightly after SNB Chairman Thomas Jordan told the local weekend press that the central bank may consider capital controls to fight the inflow of money that would inevitably flood Switzerland in the event of a euro breakup.'

'Some analysts poured cold water on the notion that even capital controls — some of the most heavy-handed currency-management tools available to policy makers — could reverse the flows into francs.

“Switzerland introduced capital controls in the 1970s as Middle Eastern oil money made its way into Swiss bank deposits,” said Morgan Stanley in a research note. “The introduction of capital controls and negative deposit rates did not prevent the franc appreciating by 30% during times when capital controls were in place.”'
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