SNB boss: as a leading financial hub, Swiss must accept risks

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The outgoing head of the Swiss National Bank, Thomas Jordan, says the country should aim to preserve its leading financial position – but that to do this, it must accept the risk of systemically important banks.

The SNB does not guarantee any financial institution, Jordan said in an interview with the Neue Zürcher Zeitung paper on Saturday. However, framework conditions should be created “to allow an entrepreneurial bank to operate internationally from [Switzerland]”, he said.

The challenge is to define an overall package of measures for the newly enlarged bank UBS to reduce risk and allow it to operate successfully from Switzerland, Jordan said. Improvements in measures to ensure resolvability as well as adjustments on the capital side are needed.

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The SNB supports the measures proposed by the Federal Council, the outgoing central bank chief said.

According to Jordan, there are many reasons speaking against a fundamental system change – such as the SNB taking over the task of banking supervision. Once again, he underlined the importance of an independent central bank: “if the SNB were responsible for banking supervision, this would increase the risk of politicisation and a loss of independence, which could have a negative impact on monetary policy in the longer term.”

Recent years, which saw comparatively low inflation in Switzerland, have shown the value of an independent monetary policy, said the SNB chairman. By focusing on price stability, the SNB also frees up policymakers to fulfil their tasks.

Unconventional

Jordan is stepping down at the end of September, after heading the SNB since 2012 and working for the National Bank for over 27 years. “There has never been another period in history in which the SNB was forced to pursue monetary policy using unconventional means for so long,” he said.

+ Read more: Swiss central bank boss Jordan to step down

His successor will be current SNB Vice-Chairman Martin Schlegel. Schlegel said after his appointment at the end of June that his focus was to continue to ensure stability.

Translated from German by DeepL/dos

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