Angry Jordan defends CS deal

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The media conversations the Swiss National Bank (SNB) had with Thomas Jordan (60) about the monetary policy situation are a no-brainer. First of all, relevant business publications are available. But this Thursday morning everything is different.

The SNB was soon forced to move the event to the larger conference room at Hotel Baur au Lac. Journalists around the world want to know what Jordan has to say about the last-minute bailout of Credit Suisse. How did it come to be? Why did the “too big to fail” rule fail? After the CS takeover, doesn’t UBS represent a huge concentration of risk for small Switzerland? Should UBS disable the Swiss business of CS again?

“Public deceived”

The SNB’s 0.5 percentage point increase in key interest rate despite the bank quake received little attention at first. Jordan says there will be enough competition in Switzerland despite the Super-UBS. He doesn’t want to speculate about a possible split of CS’ Swiss business. The SNB Chairman also declined to respond. Anyone who can answer technical questions about interest rates, the job market and the economic situation in their sleep clearly feels cornered. He could not say anything about it, it can be heard several times.

Jordan briefly lost his cool when a journalist asked a question: Have the Confederacy, Finma, and SNB fooled the public about the situation at Credit Suisse? “The public wasn’t fooled,” says Jordan, angrily. There was no indication that the banking crisis in the US posed a contagion risk for Swiss financial institutions.

SNB watched too long?

But last week everything turned upside down. “Credit Suisse suffered a tremendous loss of confidence,” says Jordan. Results: Other banks wanted to provide only limited liquidity to CS. And customers have withdrawn money in entirely new dimensions.

However, it has been known since last fall that CS is suffering from large capital outflows and may experience problems as a result. Did officials watch for too long as the great Swiss bank headed for the abyss? “I don’t want to answer questions about bugs. We are the SNB and we provide liquidity,” says Jordan.

Contingency liquidity plans were in the drawer

However, the question keeps coming. Then one can deduce from Jordan: “We have been in talks with the authorities and CS for a long time, as it cannot be ruled out that the bank may run into liquidity problems.” The preparation of emergency liquidity measures started some time ago. However, early intervention was out of the question for Jordan. “Previously, liquidity assistance would not have been a good idea. That could have triggered a bank run,” said the SNB Chairman.

Credit Suisse became a ticking time bomb in a matter of days: its bankruptcy would have serious consequences for the global economy. According to the “Financial Times”, the US and UK put great pressure on Switzerland to resolve the CS problem as soon as possible. Jordan wants nothing to do with such international pressure. But that wouldn’t be necessary. Because Switzerland’s reputation as a reliable and stable financial center was at stake.

The financial sector is in a trust dilemma

However, the global banking turmoil doesn’t seem to be over yet: The US Federal Reserve, headed by Chairman Jerome Powell (70), stressed on Wednesday that US banks are strong and well-capitalized. The value of such statements was shown on Wednesday last week. CS President Axel Lehmann emphasized that his bank does not need state aid. How it goes on is known.

The financial sector is in a trust dilemma. Can you still trust financial bosses? “Authorities are doing everything globally so that we can stabilize the system in this fragile situation,” Jordan tells Blick. The statements will prevent the global economy from entering a major crisis.

Source :Blick