The Swiss National Bank's franc cap is at the right level for now and the government has more drastic measures up its sleeve to counter the currency's strength although it hopes it will not have to use them, the finance minister told Reuters on Saturday.

Introducing a cap at 1.20 francs per euro has restored calm and helped strengthen export markets, Eveline Widmer-Schlumpf said on the sidelines of a meeting of the Conservative Democratic Party (BDP) in Chur in the canton of Grisons.

We see it is a very good measure and the SNB has chosen the appropriate level. Setting the floor at 1.20 seems to be the right level at the moment, she said in an interview.

To tame the runaway franc, which hit record highs this summer, the SNB has slashed interest rates to zero, flooded the market with francs, and on September 6 implemented a cap on the franc, saying it would defend it with all necessary means.

We expect it to work but there is no guarantee. If things don't work out as we expect them to, we could see inflation, Widmer-Schlumpf said.

Asked whether the floor might be moved to 1.25 or 1.30, she said: That is not for me to say, the SNB evaluates this regularly. From today's point of view, one can say that the measure has brought the hoped-for success.

The Swiss franc fell below 1.23 to the euro 10 days ago on talk the SNB would shift the franc floor to 1.25, but some traders said the rumors were spread by investors who had bet on the franc weakening.

Other more dramatic measures, such as capital controls or negative interest rates, have been touted to weaken the franc and are being examined by a government task force, the finance minister said.

At the moment, capital controls and negative interest rates are not a topic but they are being examined ... one needs to get ready for certain steps, hoping one will never have to take them, said Widmer-Schlumpf.

This was also a central topic at the IMF in the United States. These are political measures that would have to be introduced in cooperation with the central bank, she said.

The International Monetary Fund's semi-annual meetings in Washington last week were dominated by talks on how to stop the Greek debt crisis from threatening the global economy.

SNB Chairman Philipp Hildebrand said on Thursday negative interest rates on bank deposits would not help discourage safe-haven flows into the franc.


Widmer-Schlumpf suffered a setback in parliament 10 days ago when legislators delayed a vote on measures to help meet U.S. demands to deliver bank details of thousands of suspected tax evaders, requiring more information from the government.

Several Swiss banks, including Credit Suisse and Julius Baer as well as smaller private and cantonal banks, have come under fire from U.S. tax authorities suspecting them of having helped U.S. citizens to dodge taxes.

Asked whether the United States would accept the delay, she said: We are in big discussions, we have a delegation in the U.S. that explains what the situation is like in Switzerland and what the next steps will be.

Asked whether the United States could open criminal proceedings against one or several Swiss banks, she said: One can never rule out something will happen but we hope to be able to calm things down sufficiently to make sure they do no explode.

(Editing by Catherine Evans)