The Swiss franc has soared as much as 30% in chaotic trade after the central bank abandoned the cap on the currency's value against the euro.
The Swiss National Bank (SNB) said the cap, introduced in September 2011, was no longer justified.
At the same time it reduced a key interest rate from -0.25% to -0.75%, increasing the amount investors have to pay to hold Swiss deposits.
Following the SNB move the Swiss franc went from 1.20 to the euro to 0.8052.
It later recovered in mid-morning trade close to 1.05.
Swiss shares fell some 6% and stock markets around Europe fell with investors buying "safe haven" assets such as gold and German bonds.
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