(Corrects second paragraph to say franc breached limit only on April 5.)
The Swiss government appointed Thomas Jordan as president of the central bank. He fills the post left vacant by Philipp Hildebrand and assumes his role as the franc’s defender-in-chief.
Since he became interim Swiss National Bank chairman on Jan. 9, Jordan has faced off with investors probing how far he’ll go to defend a cap of 1.20 francs per euro, imposed by the bank on Sept. 6. The franc breached the cap on April 5 and options show investors are predicting even more appreciation.
The ceiling was introduced to force a “substantial and sustained weakening” of the currency, according to the SNB. On March 15, Jordan described the franc as still “very, very strong” and reiterated that policy makers are ready to take further measures “if there’s a worsening of the situation.”
“Thomas Jordan stands for continuity,” said Alexander Koch, an economist at UniCredit Group in Munich. “He was instrumental in all of the governing board’s decisions in recent years and he clearly advocates the exchange-rate ceiling. He is an experienced and highly qualified economist. The government made the right decision.”
At its weekly meeting in Bern today, the government also made Jean-Pierre Danthine vice president of the central bank and named Fritz Zurbruegg, head of the Federal Finance Administration, to the governing board.
Spanish Borrowing Costs
The franc weakened 0.1 percent against the euro after the Swiss government’s decision, trading at 1.20296 per euro at 12:57 p.m. London time.
Demand for Swiss assets is so strong that investors accepted negative yields at an auction of six-month government bills last week as Spain’s borrowing costs rose toward levels that prompted bailouts for Greece, Ireland and Portugal.
Jordan, 49, became interim SNB chief when Hildebrand stepped down under a cloud created by his wife’s purchase of $504,000 in August, weeks before the cap was introduced.
A KPMG probe into all transactions of the enlarged SNB board, including Jordan, Danthine and three deputies, concluded that they all acted in line with the bank’s rules in the three years through 2011.
The central bank today announced the creation of an independent compliance unit that will report directly to the chairman of the Bank Council’s audit committee. A unit will also be set up to field reports of “irregularities and infringements” from employees, the SNB said in a statement.
The bank also implemented stricter rules on employees’ private finances, including a requirement to seek approval for foreign-exchange transactions in excess of 20,000 francs.
Jordan was born in 1963 in Biel, Switzerland, and studied economics and business at the University of Bern. The father of two joined the SNB in 1997 and became head of its research unit in 2002. In 2004, he was appointed a deputy member of the SNB’s six-person enlarged governing board before joining the three- member directorate in 2007. When Hildebrand became president in 2010, Jordan was elected vice chairman.
Zurbruegg earned a doctorate from the University of Bern before joining the Federal Finance Administration. He worked as an economist at the International Monetary Fund in Washington for two years in the early 1990s and served as senior advisor and executive director of the Swiss office at the IMF from 1998 to 2006, when he was put in charge of the finance administration’s division for planning and budgets.
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