International Economics and Economic Policy

, Volume 15, Issue 2, pp 261–280 | Cite as

Net foreign asset positions and appreciation expectations on the Swiss franc and the Japanese Yen

  • Sophia Latsos
  • Gunther Schnabl
Original Paper


The paper shows that currencies of countries with persistent current account surpluses and high foreign-currency denominated assets, such as the Swiss franc and the Japanese yen, are under persistent appreciation pressure, particularly when the centres of the world monetary system follow expansionary monetary policies. This limits the choice of exchange rate regime. Given flexible exchange rates, a negative risk premium on the domestic interest rate can emerge. Empirical estimations provide mixed evidence for a negative impact of net foreign asset positions and exchange rate uncertainty on interest rates of international creditor countries at the periphery of the world monetary system.


Swiss franc Japanese yen Exchange rate risk Negative risk premium Self-fulfilling expectations Appreciation pressure 

JEL classification

F15 F31 F33 



We thank Hannes Böhm, Talina Sondershaus and David Herok for excellent research assistance. We thank Eiji Ogawa, the participants of the 2015 EEFS conference in Brussels and the participants of the Hitotsubashi research seminar in Tokyo for useful comments.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Institut für WirtschaftspolitikUniversität LeipzigLeipzigGermany

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