Switzerland opened a new round in a global currency war as fading economic growth forces policy makers to step up efforts to spur expansion.

The Swiss National Bank's decision yesterday to cap the franc's rate for the first time since 1978 marked a bid to protect trade hurt by the currency that last month strengthened to records against the euro and the dollar. The franc plunged 8.1 percent yesterday against the euro, the most since the creation of Europe's single currency. It was little changed at 1.2058 per euro at 10:53 a.m. in London.

The initiative may leave Norway and Sweden vulnerable to unwanted gains in their currencies as countries such as Brazil and Japan fight to limit appreciation amid a flight from the euro debt crisis and near-zero U.S. interest rates. With Group of Seven finance chiefs set to hold talks this week, it also exposes the clash among policy makers counting on exports to offset slumping demand at home.