SNB Can Expand Balance Sheet Further If Needed, Jordan Says

The Swiss National Bank can expand its balance sheet further if needed, President Thomas Jordan told Neue Zuercher Zeitung in an interview.

“A big balance sheet is per se no problem. We can expand the balance sheet further, if monetary policy so requires,” he told the newspaper in an interview published on Saturday.

The SNB’s holdings of foreign exchange have ballooned to more than 900 billion francs ($1.1 trillion) due to its long-running campaign to weaken the franc via interventions. That practice not only drew scrutiny from the U.S. Treasury -- the central bank’s huge pile of assets also exposes it to big swings in prices.

The franc is still highly valued, Jordan told the paper. Still, “we only intervene as needed.”

He also rejected focusing monetary policy more closely on the exchange rate and said there still was a lot of slack left in the economy.

“It would be completely premature to begin shrinking the balance sheet and tightening monetary conditions,” he said. “It would be wrong to signal to the world now that the SNB will be the first central bank to usher in a restrictive policy.”

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