(Adds Maechler quotes, background)
ZURICH Nov 23 The Swiss central bank stands
ready to intervene should an Italian referendum on
constitutional reform next month unleash turmoil on currency
markets, Swiss National Bank governing board member Andrea
Maechler said on Wednesday.
Italy is due to vote on the reforms on Dec. 4, an event
which could trigger uncertainty and a rush into the safe-haven
Swiss franc, pushing it higher against the euro.
The SNB entered the market to weaken the franc in the wake
of Britain's vote to quit the European Union, while recent data
suggested it was selling francs after the U.S. election.
"We went through two quite horrid nights with Brexit and the
U.S. elections," Maechler said at the CFO Forum event in Zurich.
"We will have to clearly monitor what the developments are
(with regard the Italian election) and we stand ready to react
as needed in the best possible way from a Swiss monetary policy
Maechler defended the SNB's use of negative interest rates
and currency market interventions to rein in the franc, which
she said remained "clearly overvalued."
"The development of the exchange rate has shown that our
twin-pillar approach is successful and has reduced the
overvaluation pressure on the franc," Maechler added.
"Without negative interest rates the franc would be
stronger, industry would be damaged and inflation would be
At every monetary policy assessment the SNB considered the
costs and benefits of potentially lowering the negative rates
from their current level of - 0.75 percent, she said.
But she indicated there could be limits to the policy, which
has come under fire from banks.
"We have interest rates at a record low. We don't have much
leeway," Maechler said, adding the SNB would examine how rates
were passed on to ordinary savers.
So far most banks have held off passing on the negative
rates to ordinary customers, although some, such as PostFinance
, have moved to charge wealthy clients a fee for
holding larger deposits.
(Reporting by John Revill; Editing by Michael Shields)