All those people looking to park money in Switzerland, a country of only 8 million people, created incredible upward pressure on the Swiss franc. From the start of 2010 to mid-2011, the value of the franc rose 44 percent against the euro.

Think about that for a minute. It would be as if dollars in the state of Virginia (with a population similar to Switzerland) suddenly were worth 44 percent more than the dollars used in the rest of the country. Virginians would be wealthier, but it would be a catastrophe for businesses in the state. Suddenly their costs would be 44 percent higher, effectively, than that of competitors in other states. Tourism would dry up; why go to a Virginia beach when it is 44 percent more expensive than a North Carolina beach?

That’s exactly the situation Swiss businesses faced. Swiss watchmakers, pharmaceutical firms and ski resorts were suffering mightily because a scary global economy made people want to park their money into Swiss banks.

The Swiss National Bank came to the rescue. After its earlier efforts to cut interest rates hadn’t done enough to dampen interest in the franc, it pulled out the big guns, and set a peg, announcing it wouldn’t allow the franc to appreciate such that one euro buys fewer than 1.2 francs. It backed it by going onto foreign exchange markets at will and buying euros as necessary to defend the peg.