The Swiss National Bank’s forays into the foreign exchange markets have – along with the appreciation of the franc – led to spectacular losses, which in turn have provoked the ire of some of the country’s politicians.
One of the reasons why is that the central bank has traditionally paid out Sfr2.5bn each year to the Swiss confederation and the country’s cantons, which own the majority of the SNB.
The losses have thrown that into doubt. With the central bank announcing a paper loss of Sfr10.8bn for the first half of 2011, will it pay out? The message from Thomas Jordan, the SNB’s vice chair, today: don’t count on it.
The launch of ‘Operation Twist’ last week has overshadowed a more modest kind of innovation by the Fed: it has become one of the first central banks to move into the iPad era with the launch of two separate apps for Apple’s tablet computer.
‘The Fed’, an app created by the Chicago Fed, is basically a tablet interface for the websites of all twelve regional banks and the Fed board in Washington. It pulls feeds of news and speeches from each website and presents them in the app.
The Bank of England’s Financial Policy Committee statement, out today, has left a lot of people scratching their heads.
The first of two recommendations calls on banks to “take any opportunity they had to strengthen their levels of capital and liquidity so as to increase their capacity to absorb flexibly any future shocks, without constraining lending to the wider economy”. The second warns that “some actions taken to raise capital or liquidity ratios could potentially worsen the feedback loop between the financial sector and the wider economy, and so should be avoided”.
At first glance, the recommendations appear contradictory. They are not. But they are conflicting.