An article in the Wall Street Journal stated, “The years long battle that smaller European central banks (such as the central bank of Switzerland) have waged against their own strong currencies may have turned a corner, thanks to the strengthening euro.” The article further noted that the “Swiss National Bank’s foreign-exchange reserves—accumulated on a massive scale since 2012—dipped slightly last month.”
a. Why would the Swiss National Bank (the central bank of Switzerland) wage a battle against its own strong currency?
b. Is there a connection between the Swiss National Bank waging a battle against its strong currency and the Swiss National Bank accumulating massive amounts of foreign exchange reserves? Briefly explain.