REPORTING FROM LONDON -- After days of saying he wouldn’t, the chairman of Switzerland’s central bank abruptly resigned Monday, brought low by a swirling controversy over foreign-exchange transactions that made tens of thousands of dollars for him and his wife.
Philipp M. Hildebrand, head of the Swiss National Bank, insisted he was innocent of any insider trading but said he would step down immediately from one of the world’s highest-profile central bank jobs. The decision followed weeks of criticism that his integrity had been badly compromised by currency trades made by his wife, Kashya, who took advantage of central bank policies to earn a hefty profit.
“My word is my bond. I had no knowledge of my wife’s transaction,” Hildebrand said, adding ruefully: “I depart on good terms and, above all, wiser and more experienced than a few weeks ago.”
As one of the world’s premier central banks, the Swiss National Bank under Hildebrand has participated in coordinated action with the U.S. Federal Reserve and other foreign counterparts to shore up the global financial system amid recession and the euro’s ongoing troubles.
Only last week, Hildebrand had defiantly pledged to defend himself “with all the power at my disposal.” But he said he decided to resign because, despite releasing a raft of personal emails and notes, he could not provide “conclusive and final evidence” that he was unaware of his wife’s controversial currency swaps before she made them.
The swaps netted about $80,000 in profit, which Philipp Hildebrand said last week would be donated to a charity for Swiss mountain farmers. The Hildebrands have also disclosed a number of other dollar-franc transactions, but those have not been subject to the same level of criticism.
Ironically, in a nation famous for the secrecy of its banking, details of Kashya Hildebrand’s lucrative trades were first leaked to a political foe of her husband’s by an employee at the boutique financial house where the couple kept an account.
An investigation by the Swiss National Bank cleared Philipp Hildebrand of insider trading. But questions over the transactions’ propriety continued to dog him; a parliamentary committee questioned Hildebrand on Monday even after he announced his resignation.
During his two-year tenure as the youngest chairman in the national bank’s history, Hildebrand courted controversy by ordering banks to strengthen their capital requirements and by acting forcefully to bring down the value of the franc.
Last September, after international investors spooked by the euro debt crisis bought up Swiss francs for protection and sent the currency’s value skyrocketing, Hildebrand shocked the financial world by slapping a cap on the franc’s value against the euro. That policy will continue even after his departure, the bank’s governing board said Monday.
“I would like to think I have been a damn good central banker,” he told reporters Monday. “I deeply regret these mistakes as well as the entire situation.”
-- Henry Chu
Photo: Swiss National Bank Chairman Philipp Hildebrand speaks during a news conference in Bern, Switzerland, on Monday. Credit: Peter Klaunzer / European Pressphoto Agency