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The Swiss Black Swan Bad Scenario: Is Switzerland Another Casualty of the Eurozone Crisis?

1
Finance Department, NEOMA Business School, Reims, 51100, France
2
Sauder School of Business, University of British Columbia, Vancouver, V6T 1Z2 BC, Canada
3
Systemic Risk Centre, London School of Economics, London, WC2A 2AE, UK
*
Author to whom correspondence should be addressed.
Academic Editors: Marida Bertocchi and Rita L. D’Ecclesia
Int. J. Financial Stud. 2015, 3(3), 351-380; https://doi.org/10.3390/ijfs3030351
Received: 28 May 2015 / Accepted: 16 July 2015 / Published: 12 August 2015
Financial disasters to hedge funds, bank trading departments and individual speculative traders and investors seem to always occur because of non-diversification in all possible scenarios, being overbet and being hit by a bad scenario. Black swans are the worst type of bad scenario: unexpected and extreme. The Swiss National Bank decision on 15 January 2015 to abandon the 1.20 peg against the Euro was a tremendous blow for many Swiss exporters, but also Swiss and international investors, hedge funds, global macro funds, banks, as well as the Swiss central bank. In this paper, we discuss the causes for this action, the money losers and the few winners, what it means for Switzerland, Europe and the rest of the world, what kinds of trades were lost and how they have been prevented. View Full-Text
Keywords: Swiss franc; Euro peg; black swans; currency trading losses; Swiss exports; quantitative easing; negative interest rates Swiss franc; Euro peg; black swans; currency trading losses; Swiss exports; quantitative easing; negative interest rates
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Lleo, S.; Ziemba, W.T. The Swiss Black Swan Bad Scenario: Is Switzerland Another Casualty of the Eurozone Crisis? Int. J. Financial Stud. 2015, 3, 351-380.

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