swiss national bank

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 www.ft.com/nbe

More QE from the Bank?

The Bank of England‘s Monetary Policy Committee meets on Wednesday and Thursday, when the decision is due out at noon UK time (11am GMT).

Will the MPC vote for more QE? Read more

From FT Alphaville

1. The central bank bashing doesn’t start and end with Bernanke.

Central banks just about everywhere make fantastic political punching bags, and the popularity of this tactic is growing. For example

FRANKFURT — As the eurozone crisis shows signs of heating up again, political leaders are once more looking to the European Central Bank for help.

Indeed they are:

François Hollande, the front-running Socialist candidate in the French presidential election, said on Monday the European Central Bank should have intervened “massively” by lending directly to eurozone countries to save Greece and counter the sovereign debt crisis.

This particular election campaign-driven episode was sparked by Nicholas Sarkozy breaking his “no ECB bashing” pact with Angela Merkel over the weekend.

Even Australia’s central bank, whose board could be forgiven for thinking they were showing admirable restraint by “taking away the punch bowl”, is being roundly beaten up by everyone from TV presenters to union leaders to, er, former political advisors for daring to wait for inflation data before deciding on an all-but-certain rate cut.

Which takes us to the next (possible) trend:

 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 www.ft.com/nbe

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

Claire Jones

Are US equities about to get a boost from a surprising source?

The Bank of Israel this month joined the Swiss National Bank and the Hong Kong Monetary Authority in investing in US stocks, initially setting aside 2 per cent of its $77bn reserves stockpile into share indices.

However, even though the amount could eventually climb to 10 per cent of its reserves, this hardly the sort of news that will move a market as big as US equities, for which $7.7 billion is small change.

But if other central banks, which collectively manage $10.7trn-worth of reserves, follow suit, then the impact could be significant.  Read more

UBS, one of Switzerland’s leading banks, has predicted the Swiss National Bank will deliver a 25 basis point rise in interest rates at its policy meeting on Thursday, contrary to a virtually unanimous consensus among other observers for unchanged rates. UBS expects the SNB to switch back to targeting the mid-point of a three-month Swiss franc interbank lending rate band of 0 per cent to 1 per cent, from the current target rate of 0.25 per cent.

The call came despite the Swiss franc hitting parity against the dollar for the first time in 10 months on Tuesday, and as the franc threatened to notch up a fresh record high against the euro after scaling a succession of all-time highs against the single currency in recent weeks. Read more

The Swiss National Bank may have suffered paper losses of up to SFr10bn (€7.5bn) from huge interventions in the currency markets to restrain the value of the franc.

The central bank is expected by market observers to report a big loss when it publishes second-quarter accounts in mid-August. Economists cannot make a precise forecast, as the SNB does not reveal when, or at what rates, it has sold francs and bought other currencies – mainly euros – in recent months. However, Martin Neff, chief economist of Credit Suisse, said: “It’s certain there will be a big loss.” Read more

Canada’s is the third central bank in a week to cite increased downside risks to the economy. “The overall level of risks to Canadian financial stability has increased” in the past six months said the Bank of Canada’s financial stability review. Read more

Is the Swiss National Bank allowing its currency to appreciate?

It may be coincidence, but the three previous times we reported rumours of bank intervention in the forex markets, the level at which they appeared to intervene was about 0.684 EUR per CHF (1, 2, 3). Read more

Traders say the Swiss National Bank was seen in Asian markets selling francs and buying euros. This would fit with Phillip Hildebrand’s stated policy of intervention to prevent excessive appreciation of the franc, which could harm Switzerland’s economic recovery. The SNB declined to comment. (Reuters)

Related posts Read more

Rising gold prices and recovering financial markets have caused a 10bn CHF profit for the Swiss central bank.

Switzerland has exceptionally large gold reserves for the size of its economy, at about 1,040 tonnes, or $35bn. Indeed, the country ranked second in the world in our gold security ranking. The rising value of gold contributed about 7.3bn CHF to the profits. Foreign exchange positions made up much of the rest, at about 2bn CHF. Read more

The Swiss franc has fallen up to 0.3 per cent against the euro after the central bank president said policymakers would seek to prevent its “excessive appreciation”. The Swiss National Bank will “monitor foreign-exchange market developments very closely” even though it doesn’t have a currency target. The statement counters views among some traders that the Swiss National Bank had relaxed its resistance to a stronger currency.

In an effort to maintain a liquid currency, the Swiss National Bank will invite non-bank financial institutions in Switzerland and Liechtenstein to participate in the repo market from 2010. Initial candidates are likely to be insurance companies with significant treasury activities in Swiss francs, and managers of Swiss franc money market funds. “In this way we plan to further promote the secured money market and increase the stability and crisis resistance of the financial system,” said Thomas Jordan, member of the SNB governing board.

A number of other significant announcements emerged in Zurich today, Read more