July 27, 2012 / 9:00 AM / 6 years ago

Meet the new Mr. Swiss franc: Fritz Zurbruegg

ZURICH (Reuters) - New to the grey-suited world of central banking, Fritz Zurbruegg is taking over arguably the most important job at the Swiss National Bank: keeping a 24-hour watch on markets to defend its cap on the safe-haven franc.

New appointed member of the Swiss National Bank (SNB) Fritz Zurbruegg attends a news conference after the weekly meeting of the Federal Council in Bern April 18, 2012. REUTERS/Pascal Lauener

Zurbruegg, 52, leaves his job as head of the federal budget office to join the SNB from August 1, filling a vacancy on the three-person governing board left by the resignation of Philipp Hildebrand over a currency trading scandal in January.

His appointment marks an attempt by the SNB’S supervisory board to find a candidate with a strong international network like Hildebrand, to complement the academic backgrounds of Chairman Thomas Jordan and Vice Chairman Jean-Pierre Danthine.

Used to weighing unpopular choices to balance the budget, Zurbruegg’s experience working in the Swiss capital in Berne should help him steer a course in his new job between demands from exporters for an even weaker franc and skepticism about the cap on the franc from right-wing politicians.

The son of a forestry expert at the United Nations, Zurbruegg grew up in Iran, Myanmar and Italy. He speaks English, French, Spanish and Italian fluently as well as his native German. His 1990 doctoral thesis dealt with wage growth and the pensions system.

After a stint at the finance ministry, Zurbruegg was senior adviser and then executive director of the Swiss representation to the International Monetary Fund from 1998 until 2006.

“He’s a very good and experienced economist, who had excellent international contacts due to his many years in Washington,” said Aymo Brunetti, former head of the government’s economics secretariat (SECO) and now head of a research institute at the University of Berne, who worked closely with Zurbruegg during the financial crisis.

“He can stand his own ground in the global arena, and from my point of view this quality is at the current time a particular asset for the central bank,” Brunetti also said.

The IMF has given its blessing for now to the cap on the franc at 1.20 per euro, set last September, citing slow growth and deflation risks, but advised the SNB to allow the currency to float again once the situation stabilizes.


After the SNB ran up a huge loss in 2010 due to its failed interventions to weaken the franc, influential right-wing politician Christoph Blocher called for Hildebrand’s head.

He recently questioned the sustainability of the franc cap and, with the SNB’s reserves ballooning, criticism of the bank from the right may increase if the euro zone crisis escalates, forcing it to act more regularly on forex markets.

On the other hand, while a debate over weakening the franc further continues to bubble under in Switzerland, there is general recognition that the cap has helped the economy and Jordan has said clearly that it could not be moved at will.

If growth and exports hold up, the bank may find itself under as much pressure from its international partners to drop a policy that effectively subsidizes Swiss exports as it will domestically to do more for growth.

To that end, Zurbruegg’s past with the IMF may prove valuable.

He is already well connected within the central bank, having worked closely in Washington with Jordan’s deputy Thomas Moser, and also coordinating with Dewet Moser, deputy head of the markets department since 2007, during his time in Berne.

Despite lacking experience in the mechanics of monetary policy and asset management, he is used to managing big sums, keeping a firm grip on a federal budget of 65 billion francs and helping to assure surpluses throughout the financial crisis.

In his new job, he will oversee foreign exchange reserves of 365 billion francs - held in assets ranging from top-rated government debt to equities, with the bulk in euros but also diversifying into currencies like the South Korean won.

His good standing in Berne - and the fact he is not affiliated with any political party - may also help him deflect any new criticism of the SNB.

“Mr. Zurbruegg is very discreet,” said Christophe Darbellay, the leader of the center-right Christian Democrats and head of parliament’s influential economics committee. “He acts in a rapid, sure manner.”

Reporting by Catherine Bosley, editing by Emma Thomasson

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