When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Switzerland

Hildebrand’s Resignation Risks Hobbling Swiss Financial Firepower

Questions about controversial foreign exchange transactions cost Philipp Hildebrand his job as president of the Swiss National Bank. Swiss leaders are eager to put the affair behind them. But the damage to the country’s financial credibility may already b

The Swiss stock Exchange in Zurich (Toni_V)
The Swiss stock Exchange in Zurich (Toni_V)
Bernhard Fischer

ZURICHEven before Philipp Hildebrand finally resigned, the scandal engulfing the head of the Swiss National Bank (SNB) was making waves at home and abroad. The Hildebrand family's controversial foreign exchange transactions were casting both the bank and its former president in an increasingly poor light. That had consequences not only for the credibility of the SNB Directorate but also for Switzerland's reputation in the many international organizations of which it is a member.

Hildebrand wasn't just SNB president. He was also vice-president of the Financial Stability Board (FSB). The FSB is an international organization that monitors the global financial system. Behind the scenes last summer, Switzerland was offered the VP position to make up for non-membership in the G-20 club – a membership that may yet lie ahead as the criterion for entry is the importance of a country in the world economy. The FSB position further enhanced Switzerland's importance in the international arena.

For years, Switzerland has wanted to be part of the club of the world's most important industrial nations but membership has so far eluded the Confederation. If Switzerland is a prominent member of the International Monetary Fund (IMF), the OECD and the FSB it is partly because "as a non-member of the G-20 it is all the more important for Switzerland to play a strong role in these organizations," says Mario Tuor, spokesman for the State Secretariat for International Financial Matters (SIF).

Federal authorities are eager to turn the page on the Hildebrand affair. Swiss leaders deemed media coverage of the affair to be "too dramatic," according to government sources.

A call for quick and decisive action

According to Klaus Armingeon, director of the Institute of Political Science at the University of Bern, the SNB's reputation had already taken a beating before Hildebrand resigned. "Not only was President Hildebrand's possible misconduct detrimental to the reputation of the SNB, so was the political staging," he says.

Since Hildebrand has now resigned and his eventual misconduct may be subject to further revelations during investigations to follow, all other actions to clear the situation up must be quick and decisive, says Armingeon – "mainly to prevent further damage." Armingeon fears massive collateral damage from the affair for Switzerland both politically and for various institutions. From his standpoint it would have been better "to put all the facts on the table, and report on them openly, no holds barred, from the outset."

Now that Hildebrand is no longer the head of the SNB, he also loses his position at the FSB, leadership of which is comprised exclusively of central bankers and representatives of finance ministries. FSB spokeswoman Margaret Critchlow declined to reply to this paper's question as to whether, at the group's next plenary assembly in Basel on Jan. 10, the damage to Switzerland's reputation would be discussed.

Hildebrand's resignation may also harm Switzerland's significant position in the world of international finance. As far as the G-20 is concerned, it may well further put off the possibility of Switzerland becoming a member.

Read the original article in German

Photo - Toni_V

You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
Green

China Can't Kick Its Coal Habit

China has endured two months of scorching heatwaves and drought that have affected power supply in the country. Spooked by future energy security, Beijing is reinvesting heavily in coal with disastrous implications for climate change.

The Datang International Zhangjiakou Power Plant shown at dusk in Xuanhua District of Zhangjiakou City, north China's Hebei Province.

Guangyi Pan and Hao Yang*

Two months of scorching heatwaves and drought plunged China into an energy security crisis.

The southwest province of Sichuan, for example, relies on dams to generate around 80% of its electricity, with growth in hydropower crucial for China meeting its net-zero by 2060 emissions target.

Sichuan suffered from power shortages after low rainfall and extreme temperatures over 40℃ dried up rivers and reservoirs. Heavy rainfall this week, however, has just seen power in Sichuan for commercial and industrial use fully restored, according to official Chinese media.

The energy crisis has seen Beijing shift its political discourse and proclaim energy security as a more urgent national mission than the green energy transition. Now, the government is investing in a new wave of coal-fired power stations to try to meet demand.

In the first quarter of 2022 alone, China approved 8.63 gigawatts of new coal plants and, in May, announced C¥ 10 billion (around $1.4 billion) of investment in coal power generation. What’s more, it will expand the capacity of a number of coal mines to ensure domestic supply as the international coal market price jumped amid Russia’s invasion of Ukraine.

Keep reading...Show less

When the world gets closer, we help you see farther

Sign up to our expressly international daily newsletter!
You've reached your monthly limit of free articles.
To read the full article, please subscribe.
Get unlimited access. Support Worldcrunch's unique mission:
  • Exclusive coverage from the world's top sources, in English for the first time.
  • Stories from the best international journalists.
  • Insights from the widest range of perspectives, languages and countries
Already a subscriber? Log in
Writing contest - My pandemic story
THE LATEST
FOCUS
TRENDING TOPICS

Central to the tragic absurdity of this war is the question of language. Vladimir Putin has repeated that protecting ethnic Russians and the Russian-speaking populations of Ukraine was a driving motivation for his invasion.

Yet one month on, a quick look at the map shows that many of the worst-hit cities are those where Russian is the predominant language: Kharkiv, Odesa, Kherson.

Watch VideoShow less
MOST READ