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

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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

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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

Claire Jones

Maintaining that “dollar lifestyle” just got a little trickier for Switzerland’s central bankers.

The Swiss National Bank’s new code of conduct, out today, forbids officials, their wives and all who live with them, from investing in anything where there is the merest whiff of a conflict of interest.

Foreign exchange transactions for anything other than purchases of non-financial assets, such as real estate, will only be allowed if assets are managed passively by an independent manager. Even for non-financial assets, any foreign exchange transaction of more than Sfr20,000 must be reported to, and approved by, the central bank’s compliance officer.

That will avoid any repeat of the embarrassment suffered by the SNB earlier this year, when Philipp Hildebrand resigned over currency trades made by his wife.

But could central banks elsewhere find their reputation damaged by the financial affairs of their most senior employees? Read more

Claire Jones

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

FOMC/ BoJ votes

The Federal Open Market Committee and the Bank of Japan’s policy board both vote on Tuesday. Will either panel back a change in course?  Read more

Ralph Atkins

Beatrice Weder di Mauro, member of Germany’s council of economic experts, has emerged as a possible candidate to join the board of the Swiss National Bank, following the resignation of Philipp Hildebrand .

In Davos, Switzerland, today, she refused to comment on rumours about her future, reports BloombergRead more

Claire Jones

Davos is not as important an event on the calendars of central bankers as the IMF/World Bank meetings or the Bank for International Settlements Annual General Meeting. Neither the Bank of England nor the Federal Reserve will be bothering to send anyone, for instance.

But there are still plenty of Davos men (and one woman) among the senior ranks of the profession. Read more

Claire Jones

Controversy over Philipp Hildebrand continues to rage. This from the FT’s Haig Simonian:

The Swiss National Bank will pay its former chairman a full year’s salary of about SFr900,000 ($942,000), in spite of his stepping down voluntarily in only the second week of the year.

The bank said Philipp Hildebrand’s contract entitled him to 12 months’ pay. The first six months covered his notice period, with the remainder compensating him for a clause in his contract that prevents him from working for another bank until next January.

The pay-off will stoke a political storm in Switzerland over Mr Hildebrand’s departure following revelations of currency transactions by his wife, and is likely to fuel the wider debate in Europe over bankers’ remuneration.

At Sfr900,000, Mr Hildebrand’s salary is high for the head of a central bank. The terms of his severance package are also generous.  Read more

Claire Jones

Philipp Hildebrand has quit as chair of the Swiss National Bank less than three weeks after government and central bank investigations cleared him of any wrongdoing.

Knowing what we now know, it does not look as though either investigation was tough enough. And neither, as the central bank and Mr Hildebrand have already acknowledged, were the rules on senior officials’ financial dealings.

Both factors have damaged the credibility of the central bank, which Mr Hildebrand noted in his parting remarks is its greatest asset.

To rectify that, the onus should fall on central bankers in Switzerland and elsewhere to show why, when making investment decisions, they have opted for anything other than handing over the management of all of their assets to an outside party. Read more

Claire Jones

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

SNB results

Friday sees the publication of the Swiss National Bank’s preliminary results for 2011. Not usually the most headline-grabbing of events granted. But given the record loss of Sfr20.8bn for 201o and the pressure that its chairman has found himself under, it is bound to make the news on this occasion.

Will the central bank report a profit? Read more

Claire Jones

There were four issues for Swiss National Bank chairman Philipp Hildebrand to address in his appearance before the media today:

1. Whether he will resign.

2. His role in, and opinion of, his wife’s dollar trades.

3. The political dimension of the scandal.

4. His view on secrecy surrounding the SNB’s code of conduct, and whether the code was tough enough.

So how did he respond? Read more

Claire Jones

Philipp Hildebrand. Image by Getty.

Philipp Hildebrand. Image by Getty.

The Swiss National Bank’s beleaguered chairman Philipp Hildebrand will meet the press at 4pm local time (3pm GMT) today for a grilling over his wife’s foreign-exchange trades.

Here are some of the questions that need answering. Read more

Claire Jones

UPDATE: 14.43 The Swiss National Bank has now published its code of conduct on insider trading for members of its governing board. Money Supply 1 SNB secrecy 0.

The Swiss National Bank’s chairman Philipp Hildebrand has found himself caught up in an insider trading scandal involving his wife’s decision to swap dollars for francs weeks before the central bank introduced its euro cap in early September. A small amount of dollars were also bought through his daughter’s account.

A central bank investigation has cleared the Hildebrands of any wrongdoing. And that the purchases have attracted so much attention no doubt owes much to the political heat the central bank has found itself under in recent years.

The purchases, revealed through private information passed to politician and frequent SNB critic Christoph Blocher, have also damaged Switzerland’s prized reputation for banking secrecy. Doing its part to repair the country’s reputation for opacity, the SNB has refused to release its policy to prevent insider trading by its employees.

But regardless of Mr Hildebrand’s innocence, as a public institution, the Swiss central bank’s stance is misguided. Read more