After a loss of 140 billion
Jordan destroys the last hopes of profit distribution to the cantons
The Swiss National Bank (SNB) will not distribute money to either the Confederation or the cantons this year. According to SNB director Thomas Jordan, after a loss of 140 billion in the first nine months, developments in the 4th quarter do not indicate a turnaround.
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Thomas Jordan, director of the Swiss National Bank.
This can only be said definitively after the annual accounts, says SNB director Thomas Jordan (59) in Radio SRF’s “Saturday Review”. “But it would take almost a miracle to get a positive result.”
Jordan also rules out the possibility that the SNB – as in 2010 – could distribute money despite the losses. At the time, the loss came as a surprise and the money was distributed, among other things, because the Confederation and the cantons had planned for it. This year, however, it was known since the spring that no profit distribution could be expected.
Jordan counts on understanding
Also, the rules for profit distribution have now been made more precise, Jordan continued. Awareness has also increased that there are situations in which the SNB cannot distribute profits.
Jordan says foreign currency sales are the main reason for the SNB’s negative result. To strengthen the franc and thus curb inflation, the SNB reduced its foreign exchange reserves for months.
However, Jordan was cautiously optimistic about the inflation trend. Though he couldn’t rule out further interest rate hikes after Thursday’s key interest rate hike.
It will probably be at least until the end of 2023 for inflation to return to the expected range of zero to two percent. Conditions such as those in some EU countries with inflation of up to ten percent are not foreseeable for Switzerland.
The SNB underestimated inflation
However, he admitted that the SNB also underestimated inflation for a long time last year. This is mainly due to Russia’s war of aggression against Ukraine, which was “not yet foreseeable” in January.
However, Jordan also said that the models used did not predict inflation optimally. “We take away that, in addition to the model’s predictions, a common-sense assessment is also needed.”
Jordan also sees Switzerland as better placed than many other countries in terms of economic growth. For example, the SNB expects lower economic growth in 2023 than this year, but not a recession, as the Bundesbank forecasts for 2023 in Germany, for example. (SDA)
