Martin Schlegel steps into the leadership of the Swiss National Bank (SNB) this week, taking over the reins from long-time chief Thomas Jordan. Schlegel’s appointment comes at a critical moment, as the nation continues to reckon with the collapse of Credit Suisse and its subsequent takeover by UBS, the country’s largest bank.
This transition coincides with a parliamentary inquiry soon to be published, which is expected to scrutinize the Swiss authorities’ role in handling the demise of the 167-year-old financial institution. The investigation could cast a harsh light on the SNB’s response to the crisis, leaving questions about the future of banking oversight in Switzerland. According to reports from Reuters, many believe the SNB, along with the Swiss financial market regulator FINMA and the finance ministry, was too slow in reacting, potentially exacerbating the situation.
Schlegel, who has worked closely with Jordan throughout his career, particularly during the Credit Suisse crisis, inherits a delicate situation. He was part of the team that orchestrated emergency liquidity injections, first to stabilize Credit Suisse and later to facilitate its merger with UBS in March 2023. While some praise the SNB’s efforts to avert a larger global financial crisis, others suggest that the central bank’s response was insufficient, leaving a bitter aftertaste for many Swiss economists and business leaders.
A notable report published in late 2023 by a former Bank of England Deputy Governor, Paul Tucker, argued that the Swiss authorities were ill-prepared for Credit Suisse’s downfall. Despite these criticisms, the SNB has remained firm in its stance, defending its actions, including the decision not to nationalize the bank, a measure some had called for during the turbulent months leading up to the merger.
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Schlegel’s Leadership And SNB Policies
Schlegel’s appointment has sparked discussions about whether his leadership will bring substantial changes to the SNB’s policies or if continuity with Jordan’s tenure is more likely. Known for his pragmatic approach, Schlegel has indicated that price stability will remain a top priority under his leadership. His former colleagues and analysts expect little divergence from the SNB’s current path, especially in the short term.
Schlegel has emphasized that the SNB is already working closely with the government and FINMA to develop stronger regulations, particularly for UBS, which now controls a significant portion of Switzerland’s banking market following the merger. The introduction of tougher capital requirements is anticipated, but Schlegel is clear that the central bank will focus on measures that balance stability with operational flexibility.
At the same time, Schlegel is tasked with maintaining the SNB’s robust track record on monetary policy. With inflation under control at 1.1%, the new chairman is expected to continue the successful efforts of his predecessor in this area. However, his unconventional personal style—Schlegel is known for his love of bass guitar and the kalimba, a traditional Zimbabwean instrument—may set him apart from Jordan, who had a more traditional, restrained public image.
As the Swiss financial sector navigates this transition, the broader implications for the global banking system are profound. Schlegel’s ability to steer the SNB through this period of heightened scrutiny could define the future of Switzerland’s banking oversight. If the parliamentary investigation reveals significant failings, it may prompt calls for reform, not only within the SNB but also across the regulatory landscape.
The story of Credit Suisse’s fall has left deep scars on Switzerland’s financial reputation. Schlegel’s challenge will be to restore confidence, both at home and abroad, as well as to ensure that the country’s largest banks are better equipped to handle future crises.
