Swiss National Bank

Claire Jones

Not Bernanke

Jackson Hole, the nearest thing on the central banking calendar to Davos, is upon us again, with some of the world’s most senior monetary officials set to head out to the upmarket Wyoming resort over the next few days.

Unlike the annual bash in the Swiss Alps, however, Jackson Hole, which kicks off on Thursday evening and closes on Saturday night, is usually a bit more than a talking shop. Of late, it has been the venue of choice for Fed chair Ben Bernanke to offer clues on where policy is heading.

But, while tapering looks like it is almost upon us, those hoping for more detail on the pace at which the US central bank will slow its asset purchases will not get it from Bernanke this weekend. Read more

Claire Jones

The Swiss National Bank’s attempt to cap the franc’s gains against the euro has resulted in a 65 per cent expansion of its reserves over the past year. The central bank now holds Sfr421bn in foreign exchange reserves, compared with Sfr255bn at the end of August 2011.

Because of the magnitude of this balance sheet expansion, the cap’s influence has gone far beyond European shores. The latest Cofer data on central banks’ foreign exchange reserves, released by the IMF on Friday, show the significance of the SNB’s cap on a global scale.

According to the data, the total amount of reserves held by the world’s central banks was $10.5tn as of the end of June 2012. They also show the currency allocation for $5.8tn of these reserves (many central banks refuse to declare the currency composition of their FX reserves).

The currency allocation data showed the proportion of reserves denominated in euros had edged up, from 25 per cent in the first quarter of 2012 to 25.1 per cent at the end of June (which doesn’t account for the dollar’s appreciation against the euro). The data suggest that this owes an awful lot to the SNB. Read more

Claire Jones

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BoE minutes

The Bank of England’s latest Monetary Policy Committee meeting minutes are out on Wednesday morning at 9.30am UK time (8.30am GMT).

Now that Adam Posen has stepped down from the committee, the most likely candidate for dissent is David Miles. However, most think Mr Miles will have resisted calling for further easing at this month’s meeting and that all of the MPC will have backed the decision to hold policy firm. This from Nomura’s Philip Rush: Read more

Claire Jones

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ECB vote

The big event on next week’s calendar is the European Central Bank’s governing council vote on Thursday, which is followed by ECB president Mario Draghi’s press conference.

The decision on interest rates is due out at 1.45pm in Frankfurt(11.45am GMT). Most expect no change. The presser begins 45 minutes later, at 2.30pm.

Mr Draghi is widely expected to reveal at least some of the details of the ECB’s new bond-buying programme. But there has been some disagreement among members Read more

Claire Jones

Barclays’ $450m fine over misconduct relating to its Libor fixings is a massive deal. The fixings, which span ten currencies and 15 maturities, are used as the reference point for financial contracts worth a staggering $350trn.

Libor is also extremely important for the world’s major central banks, many of which use the fixings to help decide how much liquidity to inject into markets. See, for instance, the minutes of the Bank of England’s June Monetary Policy Committee meeting:

UK banks had continued to access some term funding markets, albeit at an elevated cost.  In the interbank markets, sterling LIBOR-OIS spreads had remained elevated and larger than the corresponding euro spread.

However, the Swiss National Bank, goes a step further: when setting monetary policy, its governing council targets a certain level of three-month Libor for Swiss franc loans. Read more

Claire Jones

The Swiss National Bank’s governing council has today been deliberating on what to do to protect Switzerland from events in the eurozone.

Since September, the SNB has capped the franc’s gains against the euro at Sfr1.20 after a massive currency appreciation raised the chances of deflation and a recession in the Swiss economy.

Until recently the floor held without too much bother. But in the past month or so the SNB has been forced to up its game, spending tens of billions of francs in May buying euros. If the SNB losses its nerve and speculators force the franc below the floor, then the interventions could lead to substantial losses, potentially resulting in more political pressure for the central bank.

We will find out at around 8.30am London time tomorrow what the governing council decides to do. But these are the main options open to them. Read more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit

SNB decision

The Swiss National Bank will make its quarterly monetary policy assessment on Thursday at 9.30am in Zurich (7.30am GMT).

The assessment comes after it emerged this week that the SNB had spent tens of billions of francs defending its euro peg over the course of May.

Expect a raft of questions on the political ramifications of the currency interventions Read more

Claire Jones

Auditors are supposed to know “where the bodies are buried”. Or at least root out evidence of anything with a whiff of misconduct.

So it perhaps wasn’t PricewaterhouseCoopers’ finest hour when, in December, its investigation cleared former Swiss National Bank chairman Philipp Hildebrand of any wrongdoing over those FX transactions, only for Mr Hildebrand to resign a little more than a fortnight later.

PwC told the Financial Times that, despite his resignation, there was no “wrongdoing” by Mr Hildebrand as he complied with internal regulations, which formed the basis of their review. “It was not our duty to assess the behaviour of Mr Hildebrand other than with regard to the compliance with the internal regulations,” PwC said. They also noted that they qualified one transaction as “sensitive”.

Still, it will not make much difference to PwC’s bottom line; it emerged late last week following the conclusion of the SNB’s shareholders’ meeting which took place in Berne that the auditor will continue to work for Switzerland’s central bank.  Read more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit

The European Central Bank and the Reserve Bank of Australia vote on monetary policy next week.

How will the ECB react to the pain in SpainRead more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit

FOMC minutes

The minutes of the Federal Open Market Committee’s mid-March meeting are out on Tuesday at 2pm in Washington, DC (8am GMT). This from the FT’s US economics editor Robin Harding on what to expect: Read more