Swiss Franc Move Sets Markets Quaking

Switzerland’s central bank triggered unprecedented turmoil in the currency market on Thursday after it unexpectedly scrapped a cap on the franc-euro rate, underscoring the difficulty central banks have protecting their economies from developments beyond their borders.

The abandonment of the cap, which had essentially pinned the currency at 1.20 francs a euro for the last 3½ years, prompted a 33% collapse in the euro versus the franc—the biggest single-day move in a developed market traders could recall. Swiss stocks fell nearly 10% as traders worried the stronger franc would hurt...