ZURICH, March 3 The Swiss National Bank sees
increasing political risks around the world but has the tools it
needs to deal with their potential impact on the "significantly
overvalued" Swiss franc, Chairman Thomas Jordan told newspaper
Schweiz am Wochenende.
Important votes are taking place in France and Germany,
while the situation in Italy and Britain after its vote to leave
the European Union remained unclear, Jordan said in an interview
to be published on Saturday.
"Such periods of raised uncertainty are always sensitive for
us because Switzerland is increasingly seen as a safe haven,"
The bank would be able to deal with potentially
destabilising effects such as the potential election of Marine
Le Pen in France's presidential vote, he said.
"We have with our tools enough leeway to react to further
shocks," Jordan said.
The SNB has significantly stepped up its currency
interventions in recent weeks to stem the rising value of the
franc versus the euro this year.
The Swiss currency is hovering close to the level of the
Brexit vote in June, when the SNB broke with convention by
announcing it was intervening in currency markets.
A strong currency poses risks to the Swiss economy because
it makes the country's exports more expensive.
Jordan said that although the world economy had improved, it
was not the time to think of abandoning negative interest rates
- the second pillar of the SNB's strategy to rein in the franc.
"Our monetary policy remains expansive," he said. "Inflation
remains very low, there is still spare production capacity in
Switzerland and the franc is significantly overvalued.
"In the current situation negative interest rates and the
readiness to intervene remain the appropriate instruments," he
said. "Currently we see no reason to adjust our monetary
As a result of the SNB's foreign currency purchases, its
balance sheet has expanded to more than 725 billion francs
($716.47 billion), larger than the size of the Swiss economy,
raising concerns it could swing between big profits and losses
in the future.
Jordan said criticism should not deter the bank from acting,
although it was important to explain its policy to the public.
He said the SNB was not intervening to weaken the franc to
gain an unfair advantage for Swiss exporters. Switzerland has
appeared on a U.S. Treasury watchlist and could be branded a
"We have to intervene to protect Switzerland from the clear
overvaluation of the franc and its negative consequences for the
economy," Jordan said.
"This is recognised in our regular exchanges with foreign
authorities and international organisations."
($1 = 1.0119 Swiss francs)
(Reporting by John Revill; Editing by Michael Shields)