ZURICH (Reuters) - Switzerland might not name a permanent successor to Philipp Hildebrand as central bank chairman for several months, the country’s finance minister said on Wednesday, adding she had full confidence in the bank’s interim head.
Hildebrand quit on Monday, apparently forced out when emails failed to clear him of involvement in a currency trade by his wife three weeks before he oversaw the introduction of a cap on the value of the franc.
Minister Eveline Widmer-Schlumpf said it might take until April or May to choose a permanent new Swiss National Bank chairman, as well as a replacement for Hildebrand on the three-member policy-setting governing board.
“It’s fortunately the case that the vice chairman Thomas Jordan was able to take over business and is in the position to lead the board on an interim basis and therefore also guarantee Swiss monetary policy in the near term,” she told a news conference after a weekly cabinet meeting.
Jordan, 48, was appointed interim SNB head on Monday and immediately stressed his commitment to the 1.20 per euro cap the SNB set on the franc on September 6.
Markets could test Jordan’s resolve to defend that level if the euro zone crisis flares up again.
Under fire for expressing strong support for Hildebrand until he quit, Widmer-Schlumpf said the government would appoint an expert to review the way the SNB is supervised following the scandal.
She also said she had only been made aware on Friday evening of incriminating new correspondence between Hildebrand and his bank adviser on his wife Kashya’s trade.
Hildebrand quit on Monday after emails with his bank advisor showed the central banker had been involved in discussions on the big dollar trade.
Kashya, an American former currency trader who now runs a Zurich art gallery, reiterated on Wednesday it had been her idea to buy 400,000 francs worth of dollars with the proceeds from the sale of a chalet to balance the family’s portfolio.
“It was my idea that cost him his job and yes, we are still happily married,” she told Reuters at an art fair in Singapore. “What breaks my heart is his credibility has been strained.”
The SNB’s supervisory council, which met on Tuesday to start the hunt for a new board member will make a recommendation to the government, which then makes the final appointment.
“I think it’s right that you have all three (members) and then you can make the choice (on the new chairman) as a whole,” Widmer-Schlumpf said.
Before the Hildebrand row, the SNB had been under pressure from exporters and unions to try to weaken the franc further, but that prospect looks less likely with Jordan in charge.
Hildebrand stoked speculation in November the central bank might shift the cap if stalling growth and deflationary trends made it necessary, but Jordan dampened that days later when he said the SNB did not want to engage in competitive devaluations and would act only if it saw “enormous deflationary pressures.”
In a paper written together with Stefan Gerlach of Frankfurt university last April, Jordan noted that many observers believed that a cap the SNB set on the soaring franc in 1978 against the Deutschemark had led to rising inflation in the 1980s.
“In their view, attempting to halt and reverse excessive appreciation will lead to a rise in inflation,” they wrote.
Rudolf Strahm, a former Social Democrat member of parliament, told the Cash news website he was concerned Jordan would be too focused on inflation “and ignore the problems of the real economy.”
But Julius Baer economist Janwillem Acket said naming Jordan demonstrated continuity of policy and he was “already a shoo-in” to take over permanently.
The franc, which had slipped to around 1.24 per euro in November on anticipation the SNB might move the cap to 1.25 or even 1.30, rose after the SNB kept policy unchanged at its quarterly monetary policy meeting on December 15.
It then hovered around 1.22 per euro but jumped again towards 1.21 after Hildebrand quit and is seen testing the 1.20 ceiling if the euro zone crisis flares again.
As Jordan faces down the markets, some experts say the SNB should appoint a third board member with private sector experience to replace former hedge fund manager Hildebrand and complement academics Jordan and Jean-Pierre Danthine.
Sources close to outgoing Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann deny he has any interest in the job.
Apart from the three current deputy board members, Thomas Moser, Thomas Wiedmer or Dewet Moser, other names mentioned include professor Beatrice Weder di Mauro, a member of the German government’s panel of economic advisers, who would be the SNB’s first female board member.
Additional reporting by Albert Schmieder in Zurich and Kevin Lim in Singapore; Editing by John Stonestreet