FRANKFURT (MNI) – The chairman of the Swiss National Bank, Philipp
Hildebrand, warned in a newspaper interview released Wednesday that his
country needs to heed lessons from Ireland and address the problem of
financial institutions that are too big to fail.
Switzerland must not water down the recommendations of the
country’s commission on banks that are too big to fail, the SNB head
warned in the German weekly Die Zeit, adding that the proposed measures
are the minimum required.
Making his warning more poignant, Hildebrand invoked the example of
Ireland, the gravely wounded former celtic tiger.
Pressed on the possibility of the Swiss parliament watering down
the recommendations, Hildebrand pledged that if such an attempt were
made, “We will, I will, very intensively intervene in this discussion
and if necessary again explain what is at stake: the substance of the
Swiss economy.”
“Ireland indeed gives us a dramatic example of what can happen.
Ireland is an economy that in many respects is comparable with
Switzerland, from size, structure and fiscal point of departure and
today is in a disastrous state,” he said.
“This country was thrown back 10 to 20 years, ultimately because it
didn’t have a handle on the too-big-to-fail problem,” he warned.
Hildebrand observed that the SNB’s intervention in the currency
markets had helped prevent a sudden and massive appreciation of the
Swiss franc. “Such unconventional monetary policy measures are only
adopted in extreme situations,” he said.
The SNB head said that inflation is only a concern in an
environment where there is excess liquidity in the financial system as
the economy is entering a boom phase.
Asked if that were the case now, he replied, “Not yet, but the
situation in which we stand can become dangerous. We can’t miss the
right time.”
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