FRANKFURT — The head of the Swiss central bank unexpectedly resigned Monday, saying that doubts about currency trades he and his wife made last year threatened to undermine his ability to focus on steering the bank through a global financial crisis.
The departure of the bank chief, Philipp M. Hildebrand, 48, cut short the public career of a prominent international advocate of stricter banking regulation. He resigned as the Swiss National Bank battled to keep the country’s currency from becoming so strong that Swiss companies could not sell products abroad.
But analysts predicted the central bank would maintain a limit it set on the franc’s appreciation against the euro, by vowing to buy unlimited amounts of foreign currency. “It may be that some speculators will try to test the market, but we’re convinced that the S.N.B. will continue to defend the exchange rate,” said You-Na Park, an analyst at Commerzbank in Frankfurt.
Appearing before reporters in Bern, the Swiss capital, Mr. Hildebrand said he would also resign immediately from several international posts, including vice chairman of the Financial Stability Board. The panel of central bankers and regulators has played a discreet but influential role in establishing rules for big international banks that are likely to be adopted by most large countries.
The resignation was a surprise. Just last week, Mr. Hildebrand offered a detailed defense of his conduct, releasing personal financial statements related to currency trades made last year. He appeared to have the support of the council that oversees the Swiss National Bank.
“Switzerland is losing an outstanding central banker with excellent international connections, which have brought great benefit to our country,” the Bank Council of the Swiss National Bank said Monday. Mr. Hildebrand said he could not prove that he did not know about a transaction of 400,000 Swiss francs by his wife, Kashya, last August, just before the Swiss National Bank stepped up its intervention in currency markets. At the time, the transaction was valued at some $500,000.
The bank released an e-mail from Mrs. Hildebrand to the couple’s financial adviser at Bank Sarasin in which she wrote, “We would like to increase our dollar exposure to 50 percent.” Mr. Hildebrand acknowledged that use of the word “we” would cause some people to doubt his version of events.
Mr. Hildebrand said he sent an e-mail to the adviser the next day ordering that no further trades be made without his approval, and he informed the S.N.B.’s general counsel of the trade.
“I never lied,” Mr. Hildebrand said. But, he said, “I can’t once and for all prove that it was the way I said it was.”
He said he was resigning because he feared the accusations might have been a burden “during a time when total focus is needed on the duties” of the office. “Credibility is a central banker’s most valuable asset,” he said.
Thomas J. Jordan, vice chairman of the S.N.B. governing board, will be the acting leader of the bank. Mr. Jordan is an economist who has worked at the bank since 1997. He is known for being slightly more hard-line on inflation than Mr. Hildebrand. But analysts said they did not expect a major shift in course.
“We do not expect any change in the conduct of the Swiss monetary policy,” Julien Manceaux, an analyst at ING Bank, wrote in a note to clients. The exchange rate floor “is here to stay, with or without Philipp Hildebrand,” he wrote.
For much of the last three years, the S.N.B. has battled to keep investors from bidding up the value of the franc, which is seen as a haven from global turmoil. The rise of the franc against the euro and other currencies threatened to make Swiss exports too costly on world markets.
Mr. Hildebrand said he would also leave the board of the Bank for International Settlements, an institution based in Basel, Switzerland, that acts as a clearinghouse for national central banks. He will also resign as one of two Swiss representatives on the board of governors of the International Monetary Fund.
“This is a step which saddens me greatly,” Mr. Hildebrand said. “I depart on good terms, and I would like to think I have been a damn good central banker.”
Mark Carney, the governor of the Bank of Canada and chairman of the Financial Stability Board, said in a statement that Mr. Hildebrand “has been instrumental in helping to manage the response to the global financial crisis and in developing major reforms to strengthen the resiliency and stability of the international financial system.”
While Mr. Hildebrand earned renown outside Switzerland, he had critics at home. The right-wing Swiss People’s Party accused him of squandering the national wealth on intervention to buy euros and other currencies, whose value nonetheless continued to fall against the Swiss franc, resulting in losses for the central bank.
The party acknowledged playing a role in Mr. Hildebrand’s ouster, serving as the conduit for information taken from Bank Sarasin. A former information technology worker there faces criminal charges of violating bank secrecy laws in the case.
Mr. Hildebrand probably will not be missed by many in the banking industry, either.
He is a former banker himself — he and his wife met while both worked at Moore Capital Management, a hedge fund in New York.
After the S.N.B. rescued the Swiss bank UBS in 2008, Mr. Hildebrand became a visible advocate of measures to limit the level of risk that banks take. He suggested Monday that his stands might have contributed to the vehemence of the attacks on him. He said a friend sent him an e-mail quoting Woodrow Wilson: “If you want to make enemies, change some things.”
Mrs. Hildebrand apologized to the Swiss people and to her husband, Reuters reported. “I failed my husband by not considering the perception of a ‘conflict of interest’ created by my purchase of dollars,” she said. “My husband is a man of the utmost integrity, and I deeply regret that my actions might have led anyone to question this.”
Article source: http://www.nytimes.com/2012/01/10/business/global/swiss-central-bank-chief-tenders-surprise-resignation.html?partner=rss&emc=rss
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