- Thomas Jordan, Swiss National Bank Chairman
The Swiss National Bank kept intact its policy of negative interest rates and penalties for holding Swiss francs in cash. The central bank anticipates that negative interest rates will dampen the value of the Swiss Franc over time, the SNB Chairman Thomas Jordan said. In addition to that, the central bank also said that it would remain active in currency markets to suppress Switzerland's currency. The SNB also called for the country's biggest banks, UBS and Credit Suisse, to improve their resilience to better weather a potential crisis. The central bank admitted that the Swiss banking sector strengthened over last 12 months, but serious threats remain. Thus, banks should not lose momentum in their attempts to improve their leverage ratios. The central bank said Switzerland's biggest banks should be ready for the likelihood of increased capital requirements from domestic and international regulators.
Meanwhile, Swiss exports dropped in May as the strength of the Swiss Franc sapped demand in the European Union and the US for chemicals, pharmaceuticals and watches. In real terms, exports declined 2.3% to 15.46 billion francs from the previous year, while in nominal terms exports slid 11%. Watch exports in May dropped a nominal 8.9%. Imports fell 12.4% in real terms, and plunged 17% in nominal terms. As a result, trade surplus widened to 3.4 billion francs in May, up from 2.7 billion francs a month earlier.
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