ZURICH (Reuters) - Philipp Hildebrand has quit as Swiss National Bank chief, the bank said, in the wake of a scandal over a controversial currency trade made by his wife just weeks before he set a cap on the soaring Swiss franc.
“The credibility of a central bank does not depend on one person. Besides, with Thomas Jordan, the SNB has an experienced person on the board who has a lot of experience. The exchange rate will be influenced more by other factors, such as the euro zone crisis.”
“We’ve always been a big seller of his ‘line in the sand’ euro trade. Maybe his wife will turn out to be a better trader than him after all.”
“We’re surprised given he survived Thursday’s grilling. It prompts questions of whether he reflected on the whole issue over the weekend or are there more trades? Again, this is all peripheral stuff. From a policy point of view there will be no change and the Swiss franc will revert to where it was before the knee-jerk reaction. I guess (Vice Chairman Thomas) Jordan steps in for now.”
“I think (Vice Chairman Thomas) Jordan is the most likely successor. The Federal Council will decide on this, but it’s obvious that Jordan will be the preferred man for this job.
“The market can distinguish between the Hildebrand case and the monetary policy case. I don’t see any big implications for Swiss monetary policy, and I think they’ll be able to defend the cap.”
SIMON DERRICK, HEAD OF CURRENCY RESEARCH, BANK OF NEW YORK MELLON
“I don’t think this will make any difference to SNB policy per se. It’s not going to lead to a serious challenge of the Swiss franc ceiling or anything like that.
“It may be slightly counterintuitive, but it says you have a central bank you can trust and from that perspective it does make the Swiss franc marginally more attractive. But in the broader scheme of things we know the SNB is going to defend the ceiling and this just adds to the credibility of the central bank.”
“As we suggested last week his position was almost untenable and so it has proved. The Swiss franc has actually gained on the news possibly due to hopes of increased integrity ahead, but also market positioning too. There are a lot of stops in place in Eur/Chf below 1.21100 and this could well be the convenient catalyst to test them.
“Once the news gets digested, we do not expect a lasting impact on the franc from the news, however.”
“Well that was a surprise. Given the SNB’s attempt at damage control over the weekend and Hildebrand’s own fervent defense we suspected this would blow over. (...)
“The market will now be questioning whether the credibility of the EURCHF 1.200 floor is in jeopardy. At this point, we don’t expect the SNB to back down, in fact we suspect a near term increase in rhetoric. The SNB will orderly replace Hildebrand (perhaps at this afternoon’s press conference), and the economic rationale for keeping the CHF weak remains unharmed. We would fade any EURCHF selling with the expectations that any serious threat to the floor will be immediately met with an aggressive response.”
Compiled by London Treasury Desk