| Log In | Register Now
By Emma Thomasson
September 8, 2011 5:14 AM EDT
In early August, Philipp Hildebrand pulled out of an expedition to mark the bicentennial of the first ascent of the Jungfrau, one of the highest mountains in the Alps.
As the bosses of some of Switzerland's leading companies climbed through hail to the summit, the country's top central banker took on the markets. He slashed interest rates to zero and flooded the banking system with cash, in what was to be another futile attempt to bring the Swiss franc down from recent peaks.
Hildebrand has often cut a lone figure since taking over as head of the Swiss National Bank (SNB) at the start of 2010. The franc has been chased skyward by frightened investors seeking a haven in the euro crisis, gaining almost 40 percent against the euro since 2008 -- and Hildebrand has been criticized at home for his failed attempts to ground it.
"I hope that the national bank succeeds with the intervention this time so it gets some better press," Andreas Meyer, head of the Swiss national railway company, told Blick, a newspaper, on his way back from the top.
Perceptions matter in central banking, as Hildebrand, a 48-year-old former hedge fund manager, knows. The suave polyglot's early attempts to cap the rise of the franc forced the SNB to book 19.2 billion francs ($22.3 billion) in losses last year.
Follow us
Many Swiss turned on him, including the popular anti-immigration Swiss People's Party (SVP) which accused him of trying to use his interventions in the foreign exchange markets to single-handedly save the euro from collapse.
Apparently banking on that lack of political support, markets took little heed of Hildebrand's early August moves, pushing the franc close to parity with the euro on August 9 -- a jump of 18 percent in as many days.
But in the past three weeks, Switzerland has finally moved behind its central bank head. As the franc climbed yet further, business leaders, consumers, trade unions and even the most cantankerous politicians have been calling for action. On September 6, the SNB took the drastic step of setting a formal franc cap, a move that immediately forced the franc 8 percent lower.
"The action of the SNB was preceded by a noticeable shift in opinion in Swiss politics," Tages-Anzeiger, a daily newspaper, wrote on Tuesday. "Since August this criticism has been silenced, and politicians from left to right have given the SNB advance support for all measures that they could take to weaken the Swiss franc."
HOT MONEY HURTS
Can the Swiss maintain their united front?
Hildebrand's biggest critic has been Christoph Blocher, the SVP's mastermind and a fierce defender of Swiss independence from the European Union. Blocher had argued that interventions are a waste of money and that exporters could cope.
But as the debt crises in both the euro zone and the United States have dragged on, investors have poured into a shrinking pool of safe havens: gold, art, and a handful of currencies including the franc.
"The bloody euro zone's mucking it all up," one SNB trader shouted down the phone at a Zurich foreign exchange dealer in late August.
We value your privacy. Your email address will not be shared.
