Philipp Hildebrand

Hildebrand was attacked after losses arising from SNB’s exchange rate interventions between March 2009 and June 2010. In this period, the SNB accumulated foreign currency reserves worth over 200 billion Swiss francs (Codes: CHF, SFr). As the Swiss franc has appreciated, the interventions caused losses on SNB foreign currency positions equivalent to 26.5 billion Swiss francs in 2010 and 11.7 billion Swiss francs in the first six months of 2011.[11] The SNB has defended these interventions as they made “sense at the zero lower bound when the traditional monetary policy instrument is exhausted”.[12] Some international press and financial market analysts considered the interventions a “costly failure”.[13]

The People’s Party (Schweizerische Volkspartei (SVP) / Union Démocratique du Centre (UDC)) and the magazine Weltwoche were critics of Hildebrand, demanding his resignation. Prominent figures of other parties supported Hildebrand and emphasized the political independence of the SNB. In an article titled “With Unsteady Hand”, Switzerland’s major business magazine Bilanz criticized Mr. Hildebrand’s leadership of SNB, citing his limited experience and saying that Mr. Hildebrand’s actions in large parts seem to be the result of his eagerness to appeal to the public.[14]

Hildebrand is considered a driving force behind the pegging of the Swiss Franc to the Euro announced on 6 September 2011. The central bank commits to undertake transactions to cap the value of the franc against the euro at a maximum of 1.20.[15] In early August, the euro fell to near parity, at 1.00749, against the franc.[15] After initial cautious reactions by analysts,[16][17] the decision of the Swiss National Bank to aim to keep the Swiss Franc: Euro rate above 1.20 is considered to have been a success.[18]

In August, 2011, Hildebrand's wife Kashya[19][20] made a CHF 60,000 ($64,400) profit on a currency transaction. At the time, Philipp Hildebrand reported the transaction to the SNB and moved to prevent future such trades with Bank Sarasin. His wife asserted her independent finance and banking experience as the basis for the "almost ridiculously cheap" trade.[1] In January, 2012, Hildebrand denied accusations of insider trading in relation to the transaction, resisted calls for his resignation and called the coverage "a smear campaign".[21]

He said that his political foes endangered the secrecy laws and "the interests of Switzerland" with the accusations. "I made mistakes" in not canceling the trade, which profited from the SNB's decision to intervene in the currency markets two days later "but I always acted in line with the rules", he said.[22]

The profit in the later report was said to be CHF 75,000. A whistleblower alleged to have released the information about the trade has been fired and faces criminal investigations under Swiss banking secrecy laws.[22] Kashya, who runs an art gallery in Zurich[23] and previously traded currencies,[19] made two other transactions – the three totaled $2 million principal amount – but the other two "didn’t break central bank rules because they were more than six months apart". Philipp "told reporters he had donated all profits made from ... currency deals to a Swiss charitable organization [and] ... said the Swiss central bank’s rules already meet European standards. Germany’s ... Handelsblatt newspaper questioned this. 'If Hildebrand had been the guardian of the euro, and not the franc, then the European Central Bank’s rules would have given [him] no other option but to resign', the paper wrote."[20] The whistleblower was reported to have given the trade information to Christoph Blocher, vice president of the SVP,[10] and Blocher was one of the lead voices calling for Hildebrand's resignation after the disclosure.[24] Die Zeit in a strongly worded commentary downplayed any wrongdoing on Hildebrand's part, stressing the evidence was "stolen" and the resignation came only "to maintain credibility" of SNB.[2]

Hildebrand announced his resignation on January 9, 2012 stating that “Credibility is a central banker’s most valuable asset,” and that the accusations came “during a time when total focus is needed on the duties.” He also resigned his posts at the Bank for International Settlements and the International Monetary Fund.[8] He issued a statement that included copies of E-Mails between his wife, himself, and his banker, showing that he was aware of the controversial trade shortly after the order had been given by his wife, but failed to request that it be immediately cancelled.[25]

Hildebrand was succeeded by vice chairman and interim SNB head Thomas Jordan.[26]

On 7 March an independent audit by KPMG of financial transactions by all members of the governing board of the bank found no breach of regulations occurred.[27]