The five-minute blowup
At 10:30 AM Zurich time on January 15, 2015, the Swiss National Bank issued a three-paragraph statement announcing the discontinuation of the minimum exchange rate of 1.20 francs per euro — a peg it had defended since September 2011. The statement was also, quietly, a bomb.
Within 20 minutes, EUR/CHF had crashed from 1.20 to 0.85 — a 30% move in a G10 currency pair, a phenomenon normally reserved for emerging-market crises or small-cap biotech after a failed trial. CHF/USD, the companion move, spiked from 1.01 toward 1.30 before thin liquidity collapsed back toward 1.17 by day's end. Dealers reported trades printing at prices 20% offside from last-quoted market because no bids existed.
Why the peg existed
In September 2011, with the eurozone sovereign-debt crisis at its peak, investors fled into CHF as a safe haven. The franc appreciated so aggressively that Swiss exporters — from Swatch to Nestle to the machine-tool industry — started demanding relief. An uncapped CHF risked tipping Switzerland into deflationary recession.
The SNB's solution was the 1.20 floor: a public commitment to buy unlimited euros and sell francs to prevent EUR/CHF from falling below 1.20. For three and a half years it worked. The SNB accumulated enormous euro reserves — the Swiss central bank balance sheet grew from 20% of GDP in 2008 to over 80% by 2014 — but it kept the franc capped.
What broke it
By late 2014 the ECB was signaling a major QE program — eventually announced a week after the SNB move. Under QE, the euro would fall broadly against all currencies. Defending the 1.20 floor would have forced the SNB to absorb a scaled-up flood of euro buying that could have taken its balance sheet to 150% of GDP or more, exposing Swiss taxpayers to huge loss risk if the euro ever recovered.
SNB Chairman Thomas Jordan reportedly decided the cap was no longer viable and removed it without broad warning. Even the Swiss government reportedly wasn't consulted. The surprise was deliberate — any leak would have triggered front-running that amplified the disruption.
The carnage
The retail FX industry got wiped. Among institutions:
- Alpari UK: declared insolvency within hours, entered administration
- FXCM: took a $225 million loss, required an emergency $300 million loan from Leucadia (now Jefferies) that ultimately cost shareholders control of the company
- Global Brokers NZ: ceased operations
- Saxo Bank, IG Group, OANDA: survived but reported meaningful losses
- Everest Capital: lost 99% of its main hedge fund, wound down
For retail clients, many brokers' margin systems failed to stop-out fast enough in the illiquid market. Accounts went deeply negative. Some brokers (Oanda, IG) forgave client deficits. Others pursued them — a handful of collection cases dragged on for years.
What the CHF/USD chart shows
If you look at a long-term CHF/USD chart, January 15, 2015 appears as a single massive candle — a "yuuuge wick" as traders call it. The price action that day is literally off-scale on any year-long chart. The aftermath was just as notable: CHF/USD didn't return to pre-crash levels for over 18 months.
See the move yourself on our CHF to USD historical chart — set the range to "5Y" or longer and the January 2015 spike is unmistakable.
Lessons still applicable today
- Central-bank pegs are one-directional bets until they aren't. Selling CHF against the peg felt like free money for three years. Then it wasn't.
- Liquidity evaporates in the direction you need it. Brokers weren't lying when they said stops "filled at the next available price" — the next available price was 20% away.
- Leverage on managed currencies is hidden fragility. 50-to-1 leverage on a "stable" pair is only stable as long as the manager remains willing.
- Know the policy, not just the price. Traders long EUR/CHF at 1.205 were implicitly long the SNB's resolve to absorb an unlimited euro-buying obligation forever. Unpriced tail risk.
Is it ever safe to fade the SNB again?
In principle, yes — the SNB no longer defends a hard cap. It intervenes more gently through open-market operations and interest rate policy. But when Jordan or his successor Schlegel talks about CHF being "highly valued," markets still pay attention. The SNB holds 800+ billion CHF in reserves, one of the largest FX balance sheets per capita in the world, and it has repeatedly demonstrated willingness to use them.
The modern rule: don't run leveraged short-CHF against a tightening SNB, and don't run leveraged long-CHF against an obviously dovish SNB. Either way, size positions for actual volatility, not historical volatility.