Business, Finance & Economics

Swiss National Bank Headquarters

For the Geo Quiz we are looking for the Swiss National Bank headquarters. Its head offices are located in two major Swiss cities. Both are located alongside rivers, in this case the Aar and the Limmat and both cities are major financial centers.

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Bern and Zurich are the answer to the Geo Quiz. The World's Clark Boyd reports why the Swiss are not happy despite the Swiss franc trading at record highs.

Switzerland has avoided the fate of many Eurozone countries. In fact, it's become a haven for investors looking for a good place to park their assets. As a result, the currency, the Swiss franc, is trading at record highs.

You would think Switzerland would have every reason to celebrate. It's not in the European Union. It doesn't use the Euro. Its export-oriented economy remains strong, and public debt is low.

Sounds great, right? Investors certainly think so. And that's why they're putting all their money in Swiss francs, said Jane Foley, an analyst with Rabobank in London.

"This year alone, the Swiss Franc has rallied around 22 percent against the US dollar, and round about 15 percent against the Euro. It's been the valve, if you like, measuring just how bad the Eurozone crisis has become. Investors have dumped the Euro, and moved into the Swiss franc because of its safe haven appeal."

But the "safe haven" for global investors is proving a nightmare for Swiss businesses. In a sense, the country is being punished for its success.

"The strength of the Swiss franc is pushing the Swiss economy onto a very precarious path," said Ursina Kubli, an economist with the Zurich-based Sarasin Bank. She said the problem is that Switzerland is a small, open economy that depends on exports.

"A strong Swiss franc is a huge burden for your competitiveness," Kubli said.

How big a burden?

Jan Egbert Sturm, director of the KOF Swiss Economic Institute in Zurich, said an over-valued Swiss franc means, in an international context, that Swiss products have essentially increased by 30 to 40 percent in price.

"That's not sustainable for many of the export-oriented firms," Sturm said.

Swissmem is an industry group representing mechanical and electrical engineering industries. Its members export about 80 percent of what they produce to the United States or Eurozone countries, said spokesman Ivo Zimmerman.

"Around one third of our member companies are now in the loss zone," Zimmerman said. "They're losing money, and the next escalation step is to move production out of Switzerland and into the Eurozone. And that's something that the companies are considering at the moment. Jobs will be lost here in Switzerland, that much is clear."

Tourism is also taking a big hit.

Europeans and Americans see that their dollars and Euros won't go very far in Switzerland these days, so they're choosing cheaper destinations.

For the past year, experts say, the Swiss Central Bank has taken a laissez-faire approach, leaving it to the market to decide the exchange rates for the franc.

Recently, though, the Swiss Central Bank has decided that it needs to intervene. It's taking measures designed to cool off investor demand for the Swiss franc. But with Europe and America showing no signs of fixing their economic crises, the Swiss government says it may have to take "next steps."

However, it hasn't outlined exactly what those steps might be.

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