The president of the Swiss National Bank (SNB), Philipp Hildebrand, has defended the bank’s interventions to buy euros to try to counter the rise of the Swiss franc.
Hildebrand told a Club of Rome Forum in Zurich on Thursday night that the interventions between March 2009 and June 2010 were necessary at the time to combat the risk of deflation.
He added that decisions about such measures were solely based on the central bank’s mandate to ensure price stability.
The SNB announced last week it had made a loss in 2009 of SFr26 billion ($27 billion) on its foreign currency positions.
“We have always emphasised that the SNB’s goal is not to make a profit… or even speculate,” Hildebrand said
In a related development the former chief economist of the SNB, Ulrich Kohli, described buying so many euros as a “fiasco”. He told the Friday edition of the Basler Zeitung newspaper that the expected loss of the bank for 2010 of SFr21 billion was of historic proportions and unnecessary.
“That interventions are generally of no use is really nothing new,” he said.
He said the SNB had lost some credibility as a result. “It is wounded, its balance sheet weakened and it hardly has a possibility to do anything [about it].”