On January 15, 2015, two days after the Swiss National Bank reaffirmed its commitment to a three-year peg on the franc, and less than a month after stating that the cap was “absolutely central,” and it would continue to “enforce it with the utmost determination,” the SNB unleashed “Francogeddon” in the foreign exchange (forex) markets by abruptly removing the cap during active trading. The surprise about-face created historical volatility in early trading and sent the franc nearly 30 percent higher than the Euro. SNB Chairman Thomas Jordan was unapologetic and defended the move, saying the peg was unsustainable, and they had to take the markets by surprise.

Despite the SNB’s agenda, however, global forex dealers and U.S. clients took an unprecedented hit, with losses in the hundreds of millions. Initially, investors that were traumatized by the very Eurozone crisis that prompted the cap in 2011 bought Swiss francs, believing the stable currency would hold its value and provide a safe haven for their investment. Many of those investors, or their firms, suffered huge losses in the early hours of January 15, and U.S. regulators paid close attention to the turmoil.