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 Bloomberg.
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.
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.
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?
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.
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.
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.
It was a while coming, but the Swiss National Bank has finally done what was needed for it to have a decent chance of halting the franc’s appreciation.
The SNB on Tuesday said it would set a minimum exchange rate of Sfr1.20 to the euro. In order to maintain the peg, it is prepared to buy foreign currency “in unlimited quantities”. Though this could well result in steep paper losses – and so anger its owners, the SNB is right to act.
There are two reasons why.