European Financial Rumblings

I'm a philosopher, not an economist, so the subtleties of central banking and international public finance are quite beyond me. Yet this is a fascinating article by Frances Coppola at Forbes on recent changes at the Swiss National Bank (SNB) and European Central Bank (ECB). 

Essentially, the SNB halted its pegging the Swiss franc to the euro, and Coppola argues that this was to avoid financial ruin in the wake of the ECB's soon-to-commence unconstrained quantitative easing (QE) activities.

Here is an especially insightful passage from the article, about how the operations of different central banks can affect each other:

Central banks cannot be broken by markets when defending a rising currency (though they can when defending a falling one). But they can be broken by a central bank with more firepower. The ECJ Advocate General’s opinion was a game changer. No way is the most powerful central bank in the world going to allow the minnow on its border to derail its hard-won QE program. The SNB, considerably smaller than the ECB and subject to both democratic and legal constraints, had no choice but to end its Euro purchases or face destruction of its balance sheet to no purpose.

Tip of the hat to Tyler Cowen at Marginal Revolution.