The Swiss National Bank continues to keep intervention as an option for foreign exchange markets, Vice President Antoine Martin said in a television interview on RTS. Martin stressed that the bank's willingness to step in remains elevated should circumstances require action.
Martin highlighted that, although policymakers remain watchful about the strength of the Swiss franc, the currency has actually weakened against both the euro and the U.S. dollar since the conflict in Iran began. "We have said that we are prepared to take action," Martin said. "But since the start of the conflict, things have gone rather well."
Minutes released from the SNB's most recent policy meeting, at which the bank left its policy interest rate unchanged at 0%, reflect the same stance. According to the meeting record, officials agreed that keeping the option to intervene open is necessary for managing the franc's exchange rate. The minutes also note that the currency is currently trading at lower levels than it was at the outset of the war.
Beyond currency management, Martin expressed support for regulatory measures announced by the Federal Council on Wednesday. Those government proposals would substantially increase capital requirements for UBS Group AG, potentially adding billions to the bank's capital obligations.
Addressing resistance from industry participants to tougher rules, Martin said recent experience indicates that banks frequently portray a worst-case scenario when faced with increased regulation.
Summary
The SNB remains ready to intervene in forex markets to manage the franc, despite recent weakening of the currency versus the euro and the dollar since the conflict in Iran. SNB minutes confirm a maintained 0% policy rate and an agreed readiness to act. Vice President Antoine Martin also supports Federal Council proposals to raise UBS's capital requirements, noting that banks often react strongly to tightened regulation.
Key points
- The SNB retains preparedness to intervene in foreign exchange markets to influence the Swiss franc's value - impacting currency markets and export-sensitive sectors.
- SNB minutes show the policy rate remains at 0% and officials support readiness to act on the franc - relevant to monetary policy observers and financial markets.
- Martin backs government plans to significantly raise capital requirements for UBS, which could add billions to the bank's obligations - affecting the banking and financial sector.
Risks and uncertainties
- Future volatility in currency markets could prompt SNB intervention if conditions deteriorate - potential implications for exporters, importers and financial markets.
- Changes to capital requirements for UBS could increase its balance-sheet obligations, with consequences for bank funding and the domestic banking sector.
- Industry pushback against tighter regulation may create uncertainty around the final shape and timing of any new rules - affecting banks and regulatory planning.