The single truth and sure result of last week’s SNB move is that, from now on, the value of the Swiss franc will be the outcome of “market forces”.

Any policy aimed at lowering the national currency value (and thus its purchasing power for foreign products) is justified to support exporters. It is not the right policy for increasing national employment and living standards. As far as the public interest of Switzerland goes, there is no reason to cry over Thomas Jordan’s decision. (If you had borrowed Swiss francs massively to invest into dollars or euros, that is your problem.)

The SNB also lowered interest rates further down into negative territory. And this is more problematic to the well-being of Switzerland. Negative rates are no stimulus to the economy. A negative rate is a tax on banks and their clients and has a contractionary effect on demand, incomes, and jobs.

It is now too early to judge where the market-determined value of the Swiss franc will go. It is possible that once all the hedged positions around the world are cleared, it will stabilize not too far from where it was.

But in case it doesn’t, and the Swiss franc remains 15-20% more expensive on currency markets with big negative rates, Swiss producers are likely to face a drop in sales of some consequence. An increase in domestic demand is thus needed to prevent a decline of incomes and jobs in Switzerland.

The economics of the flow-of-funds tell us that this can only happen in conjunction with a further increase of either private or public debt. Given concerns with high household debt in Switzerland, a policy that removes the debt brake from public investment in infrastructure looks the most attractive approach for enhancing employment, incomes, and productivity.