The SNB promised unlimited euro purchases to cap a soaring franc.

In summer 2011 the franc soared as investors fled the euro crisis, and at one point it neared parity with the euro. The SNB warned that this overvaluation was an acute threat to the Swiss economy and carried the risk of deflation.

On 6 September 2011 it set a minimum exchange rate of 1.20 francs per euro and said it would enforce it with utmost determination, prepared to buy foreign currency in unlimited quantities. Within minutes the euro rose about 9% against the franc as the market tested, then accepted, the commitment.

The gambit worked because it changed expectations, not because the SNB spent freely at the start. By making the floor credible, it made defending it cheap, while relieving export pressure and buying room to fight deflation.

Pledge unlimited intervention to break a one-way bet

The franc's rise was a violent one-way bet driven by euro-zone fear

A floor at 1.20 was near the current level, so it was cheap to defend

An open-ended promise is more credible than a partial intervention

Cheap francs were damaging exporters and pulling prices down

A reluctant or undersized intervention invites speculation; a clearly unlimited one can move the market with very little actual spending.

The floor held for more than three years and let the SNB fight deflation even as the euro crisis deepened. Defending it meant accumulating large foreign reserves, and when the SNB later abandoned the cap the franc jumped sharply, so the commitment proved expensive to reverse.