SNB Policy Is Not One of Competitive Devaluation, Jordan Says

  • Central bank head is trying to contain overvalued currency
  • Swiss landed on U.S. Treasury’s watch list last year

The Swiss National Bank is only trying to limit the strength of its currency and isn’t pushing it down to artificially low levels, President Thomas Jordan said.

“It’s always important to stress that the monetary policy of the central bank isn’t one of competitive devaluation,” Jordan said at press conference in Baden-Baden, Germany. “We suffer from an overvalued franc and must try to contain this overvaluation.”

Jordan’s comments were made following a meeting of G-20 finance minister and central bankers, who affirmed that they would abstain from competitive currency devaluations. The Swiss attended the meeting as observers.

The SNB has used interventions for years to keep the franc, popular among investors as a haven at times of heightened stress, from appreciating. Since early 2015 it has used a two-pillar approach of a deposit rate of minus 0.75 percent plus a pledge to intervene in markets to keep the currency in check. Last year, that got the export-oriented country added to a U.S. watch list also featuring China and Germany.

Yet Switzerland’s policy wasn’t a topic during U.S. Treasury Secretary Steven Mnuchin’s appearance at the G-20, of which Germany has the presidency this year.

“Neither in the plenary, nor in the breaks or in the hallways,” Jordan said, adding that his initial talk with Mnuchin was “positive.” “It wasn’t addressed,” he said.

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