I hope Robert Mundell is proud:
The idyllic Swiss village of Grächen, flanked by better-known competitors Zermatt and Saas-Fee, has declared itself a financial microclimate, with constant exchange rate of 1.35 francs to the euro. The rate has been in place during winter months since 2011, and squarely ignores the official rate, which is currently closer to parity. It’s observed by the vast majority of hotels, shops, lift pass providers and restaurants—and has particularly paid off during the last two weeks. The only catch? You have to pay cash.
“In 2011, when the euro started falling during the eurozone crisis, bookings decreased rapidly for the winter season because it was just becoming too expensive for tourists, especially those from abroad,” explains Berno Stoffel, director at the tourism office in Grächen, which has less than 1,400 permanent residents and is almost exclusively economically dependent on farming and tourism. As the Swiss franc has soared, resorts in neighboring France, Austria and Germany – all in the eurozone – have become cheaper. “We had to do something so we decided to play central bank,” says Mr. Stoffel.
And so far it’s proved lucrative.
“I have heard from colleagues in other resorts that they have seen a huge number of holiday cancellations after the Swiss National Bank removed the currency floor, because it’s just become too expensive. We haven’t had a single cancellation on a holiday home or in a hotel due to the currency,” he says.