After cap, Swiss government seeks closer central bank ties

Switzerland could consider a new currency cap, two government ministers wrote in a separate working paper, but the resolution, which has been adopted, made no reference to this.

A government spokesman denied on Wednesday that Bern had asked the central bank to introduce a new cap on the value of the Swiss franc, which has soared in value since the 1.20 per euro peg was abandoned on January 15.

The four-page resolution reveals the political heat Bern is feeling as Swiss firms whose exports have suddenly become more expensive cut hundreds of jobs and experts predict an economic contraction for the alpine nation this year.

After the central bank informed the economy minister only about 30 minutes in advance that it was dumping the cap, which has wide ramifications for economic policy, one resolution suggested closer ties between the government and the SNB.

"The finance and economics ministries will intensify the exchange of information with the SNB with the aim of better coordinating the content and communication of monetary and economic policy," the government document said.

Spokesmen for the government and for the central bank declined to comment on Thursday.

The resolutions are noteworthy because the SNB is guaranteed autonomy, but the fallout from the decision to drop the cap and push interest rates on some cash deposits even further into negative territory has sparked a political backlash.

While the SNB says the charges on franc deposits are meant to discourage speculative flows into the franc, they hurt savers and the 673 billion franc ($694.82 billion) Swiss pension fund industry, which is subject to fees on its franc deposits.

The SNB, whose next rate-setting meeting is on March 19, faces bipartisan calls from lawmakers to exempt cash deposits of social security and pension funds from the franc charges.

It is unclear whether the matter will come before parliament before its current session ends on March 20, a parliamentary spokeswoman said.

The government will look into the effect that persistently low interest rates are having on pension funds, banks and insurers, and whether regulatory measures are needed, the resolution document said.

There have been other signs of political unease with the SNB's current set-up.

Earlier this week, independent lawmaker Thomas Minder, who masterminded a successful referendum in 2013 to impose strict controls on Swiss executive pay, launched a parliamentary initiative to expand the SNB's three-person governing council.

Business representatives including the head of Swatch Group , the world's biggest watchmaker, have also called for changes, saying the SNB board is too small and out of touch.

($1 = 0.9686 Swiss francs)

(Reporting by Katharina Bart and Paul Arnold; Additional reporting by Karolin Schaps and Joshua Franklin; Editing by Catherine Evans)