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Head Of Largest Swiss Cantonal Bank Says Swiss Capital Controls Are “Certainly Possible”
Head Of Largest Swiss Cantonal Bank Says Swiss Capital Controls Are “Certainly Possible”
Yesterday, when we reported that the SNB had hinted at that most dreaded of possibilities for central planners, one which always implies full loss of central bank credibility, namely capital control, for some inexplicable reason various readers and even contributors (“Another misleading headline by the Tylers. What yellow journalism“) got offended that we dared to point out that the central bank which two days before it crushed FX traders by ending its CHF cap had sworn that “we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy.”
Turns out “yellow journalism” as some call it – usually those who have conflicts of interest and/or put trades in the opposite direction – was spot on once again. Because if yesterday, the SNB’s Jordan merely hinted at capital controls when as he was quoted by Bloomberg (not Reuters), as saying that capital controls “was not a measure that is at the forefront at the moment“,which as we explained “the best way to admit the possibility of capital controls is to not explicitly, and unequivocally reject them. That there is even a possibility of capital controls in a central bank’s arsenal, and everyone suddenly begins to pay attention” then today the head of the largest Swiss cantonal bank, and the fourth largest Swiss Bank, the Zurich Cantonal Bank or ZCB, came out and explicitly said what so many fear (and which warning they would ascribe to as the case may be “yellow journalism”), namely that “lowering Swiss National Bank’s already negative interest rate further or implementing capital controls would be “dramatic” but “certainly possible.”
This is what Zuercher Kantonalbank CEO Martin Scholl said in interview with newspaper Neue Zuercher Zeitung am Sonntag.
And just so readers (and so-called contributors) can blame the NZZ of fanning “yellow journalism” here is the explit quote from the interview:
…click on the above link to read the rest of the article…
Swiss Shocker Triggers Gigantic Losses For Banks, Hedge Funds And Currency Traders
Swiss Shocker Triggers Gigantic Losses For Banks, Hedge Funds And Currency Traders
The absolutely stunning decision by the Swiss National Bank to decouple from the euro has triggered billions of dollars worth of losses all over the globe. Citigroup and Deutsche Bank both say that their losses were somewhere in the neighborhood of 150 million dollars, a major hedge fund that had 830 million dollars in assets at the end of December has been forced to shut down, and several major global currency trading firms have announced that they are now insolvent. And these are just the losses that we know about so far. It will be many months before the full scope of the financial devastation caused by the Swiss National Bank is fully revealed. But of course the same thing could be said about the crash in the price of oil that we have witnessed in recent weeks. These two “black swan events” have set financial dominoes in motion all over the globe. At this point we can only guess how bad the financial devastation will ultimately be.
But everyone agrees that it will be bad. For example, one financial expert at Boston University says that he believes the losses caused by the Swiss National Bank decision will be in the billions of dollars…
“The losses will be in the billions — they are still being tallied,” said Mark T. Williams, an executive-in-residence at Boston University specializing in risk management. “They will range from large banks, brokers, hedge funds, mutual funds to currency speculators. There will be ripple effects throughout the financial system.”
Citigroup, the world’s biggest currencies dealer, lost more than $150 million at its trading desks, a person with knowledge of the matter said last week. Deutsche Bank lost $150 million and Barclays less than $100 million, people familiar with the events said, after the Swiss National Bank scrapped a three-year-old policy of capping its currency against the euro and the franc soared as much as 41 percent that day versus the euro. Spokesmen for the three banks declined to comment.
And actually, if the total losses from this crisis are only limited to the “billions” I think that we will be extremely fortunate.
…click on the above link to read the rest of the article…
