By Gillian Tett and Alice Ross
The independence of the Swiss National Bank risks being compromised due to political pressure following the departure of Philipp Hildebrand as chairman, the central bank?s acting head has warned.
Mr Hildebrand resigned last month after it emerged that his wife had conducted controversial foreign exchange trades shortly before the SNB intervened to weaken the franc in September. The bank has come under domestic political pressure over the potential cost of interventions, Thomas Jordan, acting chairman, told the Financial Times.
But Mr Jordan, also the bank?s vice-chairman, insisted that the central bank?s policy operations remained stable and it was committed to defend the ceiling it had set for the franc.
?There should be absolutely no doubt whatsoever about the capability of the SNB to maintain the minimum exchange rate,? he said. ?We are prepared to buy foreign currency in unlimited quantities if necessary.?
The franc, widely seen as a haven for investors from the troubled eurozone, has faced the first real test of the central bank?s resolve following the move to prevent its currency getting stronger by effectively pegging the franc to the euro.
The Swiss currency has edged closer to the minimum exchange rate set by the SNB of SFr1.20 against the euro in recent days. Currency traders are now on high alert for a fresh round of intervention after the franc hit its strongest level against the euro in nearly five months – SFr1.2028 – which it reached this week.
In the interview, conducted last week, Mr Jordan conceded the current situation was ?challenging? for the SNB. ?We feel the pressure on the Swiss franc because of the eurozone crisis and now we have a second front – political pressure,? he said.
?There are a couple of investigations and reports being done on the influence of the government on the bank . . .which could potentially limit the independence of the SNB.?
Options being considered by the Swiss government included limiting the size of the foreign exchange interventions the SNB is able to make, Mr Jordan said.
Analysts say a second round of intervention could be more costly for the central bank, which is estimated to have spent SFr7bn when it stepped into the markets in September.
? The Financial Times Limited 2012