Why did the Swiss National Bank fix the EUR/CHF exchange rate at CHF 1.20?
"Due to the issues in the Eurozone, many foreign investors were buying Swiss Francs as a hedge against a Euro devaluation. They were in effect treating the Franc like gold, silver or some other commodity with perceived intrinsic value. This causes huge problems from the Swiss, as the value of the Franc increased and their exports became more expensive for foreigners to purchase. Things were getting bad enough that the Swiss in some places were travelling to Germany to buy groceries! To enforce this ""fixing"" of the Franc, the Swiss Central Bank announced that they would buy foreign currency in unlimited quantities by printing Francs. In reality, just announcing that they were going to do this was sufficient to discourage foreign investors from loading up on Francs. NPR's Planet Money did a really good job covering this topic:" "As the European crisis worsened the Swiss Franc (CHF) was seen as a safe currency so Europeans attempted to exchange their Euros for Francs.  This caused the Franc to appreciate in value, against the Euro, through the summer and fall of 2011.  The Swiss government and Swiss Central Bank (SNB) believe mercantilism will create wealth for the citizens of Switzerland.  The Swiss central planners believe that having an abundance of export businesses in Switzerland will create wealth for the citizens of Switzerland as the exporters sell their good and services abroad and pocket a bunch of cash.  Thus, the central planners tend to favor exporters.  From the article: At the start of the year, when exporters urged for government and SNB action, ... The Swiss Central bank continued to intervene in currency markets in 2011 to prevent the CHF from appreciating.  This was done to prevent a decrease in export business.  Finally after many failed attempts they announced the 1.20 peg in September.   The central planners give little consideration to imports, however, since manufacturers in foreign countries don't vote or contribute to the campaign funds of the central planners in Switzerland.  As the CHF strengthened many imported items became very cheap for Swiss citizens.  This was of little concern to the central planners. Currencies are like other goods in a market in that they respond to supply and demand.  Their value can change daily or even hourly based on the continually varying demands of people.  This can cause the exchange rate to rise and fall against other currencies and goods.  Central planners mistakenly believe that the price of certain market items (like currency) should not fluctuate.  The believe there is some magical number that will cause the market to operate ""better"" or ""more correctly"". How does the SNB maintain the peg?  They maintain the peg by printing Francs and purchasing euros." It's not. If you look at the page you link to and change dates, it's clear the rate changes a bit. 120.15 120.1 per hundred. The Swiss can keep the 1.200 as a target and if it's higher, sell agingst the euro to bring it down, if lower, buy. If the swiss experienced a serious financial crisis and their currency fell, they may not have the power to control it, if the rest of the world said it was worth less, you can be sure it will fall.
You can use a service like Transferwise to send money. The trick is that they allow sending money to yourself, from a GBP account to an EUR account, effectively making it an exchange shop. Their rates are usually very good, with the transfers happening on the same day most of the time. "I read an account of why the U.K. didn't end up with the euro as its currency in David M. Smick's great book The World Is Curved: Hidden Dangers to the Global Economy. Chapter 6 of the book is titled ""Nothing Stays the Same: The 1992 Sterling Crisis.""  Here's a very brief excerpt; emphasis mine: [...] As this story shows, such   blindness to the realities of a   changing world can be very dangerous.   In this case, the result was the   brutal collapse of the British pound,   which explains why the British people still use their own currency, the   pound or sterling, and not the euro.   The events that unfolded in the autumn   of 1992 were totally unforeseen, yet   they reshaped the European monetary   world and represent a phenomenon that   continues to impact global economies. [...] Smick's account of the events around 1992 runs about 28 pages.  Here's my version, in a nutshell: At the time, Britain was part of the European Exchange Rate Mechanism, or ERM. The belief in Europe was that by uniting currencies under a common mechanism, Europe could gain influence in international financial policy largely dominated by the United States.  The ERM was a precursor to monetary union.  The Maastricht Treaty would eventually create the European Union and the euro. Britain joined the ERM later than other nations, in 1990, and after some controversy. Being part of the ERM required member nations to agree to expand and contract their currencies only within certain agreed upon limits called currency bands. Due to the way this had been structured, Germany's strong position placed it at the top of the system. At some point in 1992, Germany had raised interest rates to curb future inflation.  However, Britain wanted Germany to cut rates – Britain was not in as enviable a position, economically speaking, and its currency was under pressure.  The currency band system would put Britain in a tighter spot with Germany raising rates. Enter George Soros, the Hungarian billionaire, a.k.a. ""the man who broke the Bank of England.""  Soros took a huge short position against the Sterling. He believed the Sterling was overvalued relative to the German deutsche mark, and Britain would be forced to devalue its currency and realign with respect to the ERM.  Other traders followed and also sold the Sterling short. With much pressure on the currency, the Bank of England had to buy up Sterling in order to maintain its agreement under the ERM.  Of course, they needed to borrow other currencies to do this.  Soon the BoE was in over its head defending the Sterling, realizing the exchange rate it needed to maintain under the ERM simply wasn't sustainable. Britain was forced to withdraw from the ERM on Black Wednesday, September 16th, 1992. And so, Britain does not use the euro today – and any talk of doing so is politically controversial.  Therefore I wouldn't bet on Britain adopting the euro any time soon – too many of the players are still in politics and remember 1992 well.  I think if Britain adopting the euro is ever to happen, it will be when the memory of 1992 has faded away. BTW, George Soros made off with more than US$1 billion.  Soros is a very smart guy." Fx Pip partnership Limited is a reliable trading signal and consultancy provider with many years of experience and significant success in the field of investments. All the members of the team, utilizing in the best way their scientific background and their excellent professionalism, achieve the best results. 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Conversely, by placing your money into a bank, you will accrue interest rate at some value related to some published interest rate. For example, if tomorrow, the Treasury decided to try to stimulate the economy, they could slash the interest rate, this would directly affect the rate at which your savings account would accrue interest. In general, a bond has a maturity date, where the capital is finally released from the bond. Until such date, you cannot access the money directly (you can however sell the bond, but it would likely be at a discounted value). Therefore, in general, you cannot get access to the money whenever you want it. As for a saving account, normally one can access the funds instantly, if not within a few days. This seems to the reason people seem to be focusing on. For each bond, the issuer of the bond is obligated to pay you the holder of the bond fixed payments at an interval, plus the capital at the maturity. However, obligation does not mean guarantee. If the issuer, is unable to make the payments, they may go into bankruptcy to avoid paying you. There are companies setup to advise people on the likelihood of each bond issuer on their ability to honour their debts. For example Standard and Poor issues a rating which goes all the way up to AAA for bonds. Recently, many sovereign countries have lost their AAA rating from S&P. Meaning that S&P feel that the possibility of these countries going bankrupt is non-zero. Conversely, banks may also be unable to give you your money when requested. In the US, the reserve requirements means that at any one time it only holds 10% of the money it owes to its customers. This can mean that if every customer turns up to the bank to demand their money, that bank would be unable to pay. This situation is called a Bank Run. During such a situation, the bank would likely collapse and default. In many modern countries, the government put into place guarantees on the first xxx amount in saving accounts, but otherwise, your savings could be lost. There are many complex reasons to choose one instrument over another (including some I have avoided), even if at the outset, they could appear to have the same rates. "This is the best tl;dr I could make, [original](http://reuters.com/article/idUSKBN18V0BM) reduced by 89%. (I'm a bot) ***** &gt; Macron campaigned on a promise to &amp;quot;Rebuild&amp;quot; Europe through deeper integration of the euro zone, the 19-nation currency zone which ranks as one of the EU&amp;#039;s biggest achievements but which critics say is still work in progress 18 years after its launch.  &gt; SMALL STEPS. At the heart of Macron&amp;#039;s plan for Europe is the creation of a euro zone finance minister who would oversee a pooled budget for investments and transfers intended to help euro zone members cushion downturns.  &gt; &amp;quot;When Britain leaves, 85 percent of the EU budget will be financed by members of the euro zone. You don&amp;#039;t need an extra budget for the euro zone on top of that,&amp;quot; he said.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6fnxv9/hurdles_to_francogerman_bargain_on_euro_zone_are/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~138002 tl;drs so far."") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **Macron**^#1 **zone**^#2 **euro**^#3 **Merkel**^#4 **Europe**^#5" You need to read up on how QE works. Banks are not reinvesting deposits at the Fed in Equities. They are earning interest and sitting there, hence why the velocity of any money supply measure is far below where it used to be. "A falling exchange rate is an indication of falling confidence in a currency.  Countries like Iran or Venezuela, with a managed exchange rate, set their exchange rates at a higher value than the market accepts. Such market expectations may be influenced by poor government management, interventions into markets (such as nationalising businesses) or general instability / scarcity. The governments act to manage that uncertainty by limiting the availability of foreign exchange and pegging the exchange rate.   Since there is an inadequate supply of trusted foreign currency people turn to informal exchanges in order to hedge their currency risk.  This creates a negative feedback loop.  People in government who have access to foreign exchange start to trade on informal markets, pocketing the difference in the official and unofficial rates.  The increasing gap between the two rates drives increasing informal market exchange and can result in speculative bubbles. Driving instability (or economic contradiction) is that the massive and increasing difference between the official and market exchange rates becomes a powerful form of rent for government officials. This drives further state-led rent-seeking behaviour and causes the economy to become even more unstable. If you're interested in a more formal academic study of how such parallel markets in currency arise, ""Zimbabwe’s Black Market for Foreign Exchange"" by Albert Makochekanwa at the University of Pretoria is a useful source." Central banks don't generally post exchange rates with other currencies, as they are not determined by central banks but by the currency markets. You need a source for live exchange rate data (for example www.xe.com), and you need to calculate the prices in other currencies dynamically as they are displayed -- they will be changing continually, from minute to minute.