Should enter the language as a way of demonstrating how darned expensive some minor item of consumption is.

I mean, I can understand why my cappucino (80cl of warm milk) has just cost me 5chf. It’s 2127m here, and free-market competition is prevented from playing its fullest part. High rent-seeking, needed to repay the coat of the phenomenal public goods provided here. The lifts, the rescue service, the endless pre-1988 music…

So if anyone can post a link explaining how the Swiss Franc stays so high, i’d be grateful.


12 thoughts on ““like a Swiss Minibar” ….

  1. Dunno about a link, but it might have something to do with the fact that the CHF is backed by gazillions of dollars worth of wealth extracted from the rest of the world and stashed there for safe keeping.

    1. The gazillions of monies must help. As an aside, I think that was one of the things in the 19th century that allowed the UK to maintain relatively low levels of reserves because there was a lot of other people’s money in the country.

      When I was in geneva we always popped over the border to France and picked up our drink there. £3 bottle of Minervois, thankyouverymuchnotlikelyheremrdarling.

  2. The SNB have been printing CHF and selling them in the FX in a vain attempt to weaken the currency for over a year. A healthy current account surplus, the ultimate safe haven currency and trying to fight leveraged gunslingers in the FX means the CHF is regularly the most overvalued currency in the world. With 50 per cent of GDP being exports ( two thirds to the EU) the overvalued currency should be the ultimate transmission mechanism for imported deflation. Why is it overvalued? An ageing population in Europe who are terrified in the current environment of losing capital so they retire it to Switzerland. A weak and undervalued USD. There is a 95% negative correlation between EUR/USD and USD/CHF, that is as near perfect correlation as is possible to get. Both the EUR and CHF are overvalued vis-vis the USD, and the cause is the undervalued RMB/USD peg. Contrary to what some economists believe ( Paul Krugman) the USD will appreciate against the EUR and CHF if the Chinese appreciate the RMB/USD peg. Therefore, how much you pay for your cappucino in Switzerland is being affected by Chinese monetary policy, Giles.

  3. Useful answers. So I get how there is pressure from capital inflows, but am still amazed they have such a current account surplus. Then, as for the prices, it occurs to me that it being landlocked/ inaccessible must impact here – I bet the coffee in Greenland is pricey too. I guess what I don’t get is why expensive imported commodities have not driven up the prices of Swiss labour & destroyed their current account surplus
    Having a brilliant holiday

  4. I was in Geneva last summer, and it’s extortionate. I was thinking it might have been the large presence of intergovernmental organisations, increasing incomes relative to, well, everywhere and dragging prices up. Also taxes: I got free public transport, courtesy of the local government’s tourist board or someone; well, the Swiss taxpayer will have to pick that up one way or another, and the market adjustments are likely to be felt by tourists as well.

    But if Switzerland as a whole is insanely expensive, then my very Geneva-specific theory is blown out of the window. 😦

    1. We took our kids into a toyshop yesterday. I had to pledge one kidney just to pick up some postcards. It’s absolutely mad.

      1. One of the things I did like about Geneva was that it felt a lot more at ease with itself, and both freer and less fearful. It felt far easier to walk about Geneva centre late at night than one would have done in a major UK city. So there were some Swiss things I thought we could do with a little more of in the UK, although not the prices!

  5. As Chris Cook puts it, the gazillions of dollars stashed in Swiss bank accounts clearly help, to put it mildly.
    Another explanation to both Swiss franc level and high local prices (two factors not necessarily correlated: Nordic countries have fared for decades with high prices and lower currencies) is the fact that the Swiss population enjoys high-quality education and public services… and accepts to pay a higher price for those through taxes. That comes at a price, too. Capital flows, both from abroad and inside, help.
    Psycholically, the Swiss are also keen to show their status symbols by buying dearer. And the supply-side knows that and plays with it.
    That makes Switzerland more comparable with Germany and Austria than with any other European country. this is the social dimension of what some refer to as the “Rhenan model”.
    That said, it remains a beautiful, boring and hypocritical country.
    To Vimothy: Right about Austrian economics. Note there’s no such thing as Swiss economics. Just Swiss money…

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