Philipp Hildebrand to Succeed Roth as SNB Chairman
Philipp Hildebrand will become head of the Swiss central bank in January, putting a leading advocate of unconventional monetary policy at the helm of the country’s battle against a deepening recession.
Hildebrand, who has served on the central bank’s governing board since 2003, will succeed Jean-Pierre Roth after Roth retires at the end of 2009, the finance ministry said in Bern today. It also named Jean-Pierre Danthine to the board and Thomas Jordan as vice-chairman.
Hildebrand, 45, inherits an economy facing its worst recession since 1975 and where consumer prices are starting to fall. He heads the SNB’s financial-stability department and has been one of the most vocal supporters of non-standard measures, saying that the central bank will use all means to prevent the country from slipping into a protracted period of deflation.
“Hildebrand is the right person and he’s definitely up to the task,” said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. “The SNB’s resolute and innovative measures over the past weeks can be credited to a large extent to him.”
SNB Action
The franc dropped against the euro today, reversing gains, after the announcement. The currency fell to 1.5184 per euro as of 1:28 p.m. in Zurich from 1.5163 yesterday. Swiss government bonds gained, pushing the yield on the 10-year security down four basis points to 2.17 percent.
The franc has fallen 3 percent since the SNB began buying foreign currencies on March 12, when it also cut its benchmark interest rate to near zero.
Hildebrand said last week the SNB will continue to intervene in currency markets as long as needed to fight the risk of deflation. Consumer prices fell 0.4 percent in March from a year earlier, the biggest drop since 1959.
“A renewed appreciation of the franc contains the risk of a sustained deflationary dynamic,” he said on April 2. The SNB will act to prevent such a development “by all means instant faxless payday loans.”
Hildebrand takes over the SNB at a time when bank regulators are drafting new rules for the Swiss financial system. UBS AG, the country’s biggest bank, has been burdened by more than $50 billion in losses and writedowns. Credit Suisse Group AG, the country’s second biggest bank, has been hit by more than $15 billion in losses.
At the same time, unemployment is rising and the central bank forecasts that the economy will shrink as much as 3 percent this year.
Banking Veteran
Hildebrand was the youngest ever governing board member when he joined the SNB in 2003. A former member of the Swiss national swimming team, he narrowly missed qualifying for the Olympic Games in 1984.
Hildebrand anticipated his future career when he rubbed shoulders with financiers and senior policy makers as a bell boy at Davos, the Alpine resort that hosts an annual meeting of policy makers, economists and bankers. He studied at the University of Toronto and Oxford and became SNB vice president two years ago.
A veteran of the banking industry, he was chief investment officer at Vontobel Group until 2001, when he became a member of the executive board at Union Bancaire Privee in Geneva.
Hildebrand and Jordan will be joined on the SNB’s three- person governing board by Danthine, 58, currently a professor of macroeconomics and financial theory at the University of Lausanne. He will take over the SNB’s Department III, responsible for implementing monetary policy.
Danthine “is a very good choice,” said Janwillem Acket, chief economist at Bank Julius Baer in Zurich. “He is likely to support the current pragmatic approach the SNB has shown over the past weeks.”
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