Philipp Hildebrand, the head of the Swiss central bank, has resigned, effective immediately, over accusations that his wife conducted questionable currency trades.
A Swiss magazine named Weltwoche claimed that he personally authorized the trades which netted the couple a profit of 75,000 Swiss Francs ($78,350) in only two months,
Hildebrand denied he was even aware of the transactions, but decided it would be best for the bank’s reputation to walk away now.
At a press conference in Bern, Switzerland, the former bank boss said: In view of the continued public debate centered on these financial transactions and following detailed examination of all documentation and reflection since the news conference, I have come to the conclusion it is not possible to provide conclusive and final evidence that my wife did initiate the transaction without my knowledge.”
He added: The fact is my word is my bond I had no knowledge of my wife's transaction on that day.
Kashya Hildebrand released a statement herself in which she defended her husband.
My husband is a man of the utmost integrity and I deeply regret that my actions might have led anyone to question this, she said.
According to reports, Kashya Hildebrand, a former hedge fund trader who currently operates a Zurich art gallery, purchased 400,000 Swiss France ($418,000) for $504,000 on August 15, only three weeks before the Swiss Central Bank intervened to established a new minimum exchange rate of 1.20 Swiss francs per euro in order to halt a huge inflow of money into the country from the Euro zone which was harming the Swiss economy.
Four weeks later, when the Hildebrands sold back the $516,000 and converted it into Swiss Francs, they made a tidy profit since the Franc has fallen over that period.
However, both the Swiss central bank and the accounting firm of PricewaterhouseCoopers (PwC) have cleared Mr. Hildebrand of any wrongdoing.
Hildebrand was also defended by Bank of England governor Sir Mervyn King, who said in a statement: We all know that he is a man of total integrity, extraordinary ability and, most important of all, courage. Such people are rare. His country will miss him.
Still, his sudden resignation raises more questions.
Gavin Friend, director of markets strategy at National Australia Bank, commented to the Telegraph newspaper of UK: We're surprised [at his resignation] 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?
Robert Peston, the business editor at BBC, commented: “Central bank governors are the world's great unelected economic powers - setting interest rates, bossing banks, trying to curb inflation and maintain economic stability. So they are supposed to be beyond reproach, never once thinking of their own wealth, only that of their respective nations.”
Peston added: “That's is why it was so embarrassing for the Swiss central bank governor, Philipp Hildebrand, that his wife made a SFR 75,000 profit from buying dollars ahead of a decision by her husband to stem a rise in the Swiss currency. He has quit - not because this former hedge fund manager was involved in the transaction, but because (he says) he can't prove beyond a shadow of doubt that he wasn't.”
Thomas Jordan, the Swiss bank’s vice chairman, will take over from Hildebrand on an interim basis.