ZURICH. There is a particular smile that appears on Swiss faces when the franc hits another record. It appeared when parity with the euro fell, and it appears again whenever a foreign central bank stumbles. We treat the exchange rate like a medal table, and we are usually on top of it.
The smile is misplaced. A currency this strong is not a trophy; it is a warning light. It tells us that the world is frightened, that money is parking itself in Switzerland because it trusts nowhere else, and that our own economy is being squeezed in ways the headline number hides. A warning light is not improved by being admired.
Start with what the strong franc actually does. It makes every exported machine, watch and kilogram of cheese more expensive in the customer's currency, and it makes every import cheaper. That sounds pleasant until you notice that falling import prices are what keep Swiss inflation near zero and drag interest rates down with it.
The National Bank's balance sheet tells the same story from the other side. Hundreds of billions in foreign assets, accumulated largely to stop the franc rising even faster, are not a war chest. They are the receipt for a defence that has already cost a great deal and buys only time.
The sectors that live closest to the exchange rate have been saying this for years. Hoteliers watch guests from the euro area stay away as Swiss prices outrun their budgets; machine builders hedge, trim and quietly shift production east. Each of them can read the exchange rate on a terminal, and none of them can vote it down. The damage arrives as a slow leak rather than a flood, which is exactly why it is so easy to ignore.
The honest case for the strong franc deserves respect. It keeps inflation lower than anywhere else in Europe, it raises the purchasing power of every Swiss salary, and it disciplines companies into productivity gains that lazier economies never achieve. Many countries would kill for our problem.
All true, and all beside the point. The question is not whether strength has benefits but what the strength is signalling. A currency does not climb because its home economy is brilliant; it climbs because capital is fleeing somewhere worse. The franc is a thermometer, and a high reading means someone else has a fever.
What the debate gets wrong is the scoreboard thinking. Politicians quote the exchange rate as if it were a verdict on policy, when it is mostly a verdict on everyone else's. Meanwhile the real verdicts, on productivity growth, on company formation, on the slow drift of industry to friendlier cost bases, go unread.
The cost of the trophy mentality is complacency with a lag. Exporters respond to the squeeze first with margins, then with wages, then with relocation, and each stage is invisible until the next one begins. By the time the factory gates close in some midland town, the exchange rate that did the closing has been celebrated for years. The skill base that leaves with those gates does not return when the currency finally weakens.
A better response would treat the warning seriously. Invest the credibility the franc buys in the things that justify it: research, apprenticeships, energy security, faster permits. And stop demanding that the National Bank perform miracles of suppression that only enlarge the eventual reckoning.
Above all, retire the smile. The franc's strength is a fact to be managed, not an achievement to be toasted, and the management begins with admitting what the number means. A country that reads its own currency correctly has an advantage most governments would envy.
A thermometer that always reads high is not a sign of health. It is a sign that the room is on fire somewhere else, and that the heat will reach us eventually. The franc is telling us the truth. We should stop applauding it and start listening.