Central Bank Currency Shock Sends Swiss Franc Soaring; World Economic Forum Set To Meet in Davos; Fasnacht Clique Opens Doors to Women; Basel Pedestrian Zone to get Facelift

Approximately three years ago, The Central Bank of Switzerland known as the SNB decided to undertake a program of capping the exchange rate at which people could trade Euros for Francs.  The leadership of the bank vowed to use all of Switzerland's national resources to limit the value of the Francs at 1.2 per Euro in order to keep Swiss companies and its products competitive within the Euro region.  The markets, having taken the promise of the bank seriously, was of course shocked when late last week, the SNB backed away from its program without warning.  At one point the Franc had appreciated close to 40% vs the euro and almost 20%  against the dollar.

As a group, Swiss, left-leaning politicians that typically represent labor unions and small business owners expressed dismay at the bank's actions citing the likelihood of increased costs and reduced exports which would undermine employment.  UBS the Swiss Bank, predicted the action would reduce exports by 5billion francs per annum and reduce Swiss Gdp by 0.7% this year.  Alternatively, right-leaning politicians expressed their support because they felt the country was having to increasingly spend its wealth on buying the weakening Euro as the Franc appreciated against it.  The bank itself simply stated it needed the flexibility to run its programs and policies where it was increasingly preoccupied with supporting an unsustainable exchange rate.

To expats living in Switzerland and making remittances in their home country, this of course is a huge, if temporary windfall.  The Swiss francs expats typically earn, now buy more at home, and specifically for Baselers, buy more goods over the border.  The effects on the Swiss companies which employ expats remains to be seen and will no doubt be a top-of-mind issue for them in the near term.

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French President Francois Hollande, Belgian Prime Minister Charles Michel and German Chancellor Angela Merkel will be among the 2,500 prominent figures attending the World Economic Forum's annual meeting opening Today in Davos, with all eyes on their countries' battle to root out jihadists planning attacks in Europe.  The threat posed to the continent by young extremists returning to Europe after fighting with Islamic State and Al-Qaeda-linked groups in the Middle East has soared to the top of Western leaders' agenda following the attacks in Paris on the satirical magazine Charlie Hebdo.

Another conflict likely to be discussed is Ukraine's battle against a pro-Russian rebellion in its eastern industrial heartland.  Both Ukrainian President Petro Poroshenko and Russian Foreign Minister Sergei Lavrov are in attendance at the week-long talk shop, with Poroshenko expected to use the forum to drum up support.

Economic issues will also be weighing heavily on the minds of attendees normally accustomed to an ambiance of luxury and entertainment.  In addition to dreadful economic statistics emanating from every corner of the globe, Oxfam, the global charity group, reported this week that by 2016 the richest one percent of the world's population will own half its wealth.

And in case the gloom is lost on any of the attendees, the swiss central bank's decision last week to remove its currency cap is expected to increase the cost of attendance by 15%, not exactly small potatoes when recent estimates suggest the cost per attendee is approaching 200 thousand us dollars per person.

**************************************************************************************   Baseler Fasnacht and its ancient attendant traditions of Parades and Cliques is fast approaching.  One of the oldest Cliques, Olympic, with a history that goes back 107 years is also one of the remaining seven that could also claim to have allowed only men into its membership.  Until this year, that is.  Each clique of course picks an annual theme which informs the artistry on the floats and costumes of its parade participants.  Olympic Clique's theme this year is "overcoming borders" according to Oscar Olano, president.  Befitting of this theme, the board and members decided to break with tradition and invite female members for the first time.  However, women who do successfully join (after a rigorous application process) will only be allowed to participate in the Cortege event.  Depending on the success of this gender experiment, President Olano of Olympic Clique said "What comes next year remains to be seen"    *******************************************************************************************

 

A major upgrade to the streets and sidewalks of Basel's pedestrian zones has begun.  FreieStrasse and the surrounding shopping district will all be repaved with quartz sandstone at a cost of 24.5 million francs.  Gone will be the old cobblestone and concrete curbs, replaced with simple rectangular patterns of the new material.  Ultimately, if the upgrade is deemed successful it will become the standard informing a uniform design for all pedestrian zones throughout the city.  City Planning director Hans-Peter Wessels told the media the project has been in the works for some time, as a result of investments already made in motor-vehicle roads.  The goal is largely to improve the aesthetic appeal of Basel's Streets.  A total of an additional 28.5 million francs has also been allocated to the redesign project, of which 2 million is for a special public competition to redesign Rümelinsplatz and Claraplatz in Kleinbasel.  All of this newly planned Klapp and Klopp is expected to be completed by 2021.