Swiss National Bank President Philipp Hildebrand revealed that the Swiss central bank is capable of buying very large quantities of foreign currency to influence the level of the Swiss franc as well as keep deflation in check.

Mr. Hildebrand said, "We won't allow deflation risks to reemerge, our position is crystal clear. A surge in the Swiss franc could give rise to such a danger".

According to Janwillem Acket, Chief Economist at Bank Julius Baer, it seems like the SNB is raising the level of its rhetoric on curbing any franc gains. Though they are trying to impress the markets, the threat of inflation is still looming large.

The bank's policy has been comparatively successful, as far as the past SNB interventions in foreign-currency markets are concerned.

He quotes the example of the development in the economy of Switzerland. It contracted only 1.5% last year and if it is compared to other countries, it is a good performance.

SNB doesn't want to put at risk the good work of the past year, according to the London-based National Australia Bank currency strategist Gavin Friend.

As per what Mr. Hildebrand said, the central banks ought to assure that the financial system has enough liquidity as well as to ease the financial conditions in general.