Jordan confirmed as new central bank chief

Switzerland's central bank on Wednesday confirmed interim chairman Thomas Jordan will take over as chief after former head Philipp Hildebrand quit amid a foreign exchange scandal.

Jordan confirmed as new central bank chief

“At its meeting of April 18th, the Swiss Federal Council appointed Thomas Jordan to be the new Chairman of the Governing Board of the Swiss National Bank,” an SNB statement said.

SNB chairman Philipp Hildebrand stepped down in January after becoming engulfed in a row over a dollar exchange by his wife weeks before the bank intervened to halt the rise of the franc — a move that saw the dollar rise significantly against the Swiss currency.

The bank had said an investigation proved Hildebrand did not break any rules but its governing council came under fire and promptly launched a review of its regulations.

In a set of tighter rules announced on Wednesday, employees will have to seek approval for all foreign exchange trades of more than 20,000 francs ($21,700) and extra restrictions have been introduced for certain members of staff with access to privileged information,

Former vice chairman Jordan, who joined the SNB in 1997, will take over with immediate effect.

The post of vice chairman went to current governing board member Jean-Pierre Danthine.

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Why is the demand for 1,000-franc banknotes growing in Switzerland?

Large-denomination banknotes, like the 1,000-franc note, are rarely used for everyday transactions in Switzerland. So why are they becoming more popular?

Why is the demand for 1,000-franc banknotes growing in Switzerland?
The kind of banknotes the Swiss like to stash away. Photo by AFP

The demand for 1,000-franc notes has risen in the past months, data from the Swiss National Bank (SNB) indicates.

CHF1,000 converts to approximately €925.75, £824,63 or $US1126.98. 

Whether withdrawing the money from an ATM machine or directly from a bank, customers request large-bill denominations more often than before.

“We do know there is more cash being currently withdrawn in large notes, but it changes hands less often” Sarah Lein, a monetary policy expert from the University of Basel told SRF public broadcaster.

This means the money is not being spent but stashed away.

“We can conclude that some large notes end up in a safe”, she added.

READ MORE: Switzerland’s economy forecast to recover 'from summer onwards' 

The reason, she said, is that many banks charge their customers negative interests on large deposits.

“Therefore, it could be cheaper to simply withdraw the cash in large notes and keep it in a safe, especially since inflation has been extremely low for a long time”, Lein added.

This is not unusual — in times of crisis, more cash is often in demand.

But could this cause the shortage of 1,000-franc bills?

That is not likely to happen, Lein pointed out.

“Both the central and commercial banks have enough cash stored in their vaults to meet such demand. So there is always enough money available”, she said.

There is about 48.6 billion francs floating around in the form of 1,000-franc notes, constituting 59 percent of all Swiss notes in circulation. 

It is the world’s second-largest denomination after Brunei's B$10,000 note.

READ MORE: What do people in Switzerland spend their money on?