Schlegel enjoys an excellent reputation among professional economists who know him well and is open and engaging in public. His appointment is intended to signal and ensure continuity with the low inflation policies pursued by the SNB. These have been both popular and successful: during President Jordan’s tenure the average annual inflation rate in Switzerland was 0.4%, much below the 2.2% average in the euro area.1
In public comments, Schlegel has presented himself as the continuity candidate and has emphasised that Jordan’s focus on price stability would not be changed. He was careful to signal that in off-the-cuff remarks made in 2018, saying that "I was Thomas Jordan's intern and I kind of still am." Jordan’s policies enjoy strong public support and that is an important signal for investors and market participants.
Investment Insights • MFN
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The SNB’s New Governing Board
At its meeting of 26 June 2024, the Federal Council appointed Martin Schlegel as the Swiss National Bank’s new Governing Board Chairman and successor to Thomas Jordan from 1 October 2024. It also appointed Governing Board Member Antoine Martin Vice Chairman, and Petra Tschudin, currently Alternate Governing Board Member, as a new Member of the Governing Board.
But stepping into Jordan’s shoes is not an easy task. Jordan has a strong intellectual interest in monetary theory and policy, honed during a two-year stay at Harvard University before joining the SNB, and is widely seen as the leading Swiss monetary economist of his generation. In contrast, Schlegel has a more practically oriented nuts-and-bolts approach to monetary policy and has spent a large part of his career in monetary operations.
Continuity in monetary policy may carry over to continuity in other aspects of SNB policy. Jordan’s views in this regard are often seen as controversial and dated, but rarely commented on in public. However, recently some critical articles have appeared in leading Swiss newspapers.2 They present him as dominant, conservative, and averse to change. There is consequently potential for a modernisation of the SNB.
While the regulations of the SNB’s Nominations Committee state that the Committee is independent of the Governing Board members who merely have a right to offer their opinion, it is alleged that Jordan has exercised wider influence3. The new Governing Board appears hand-picked by him, consisting of two of his former assistants.
In financial circles it is often noted that with about CHF 800 bn in foreign assets, the SNB is one of the largest Swiss asset managers. Nevertheless, in the Governing Board, and the Extended Governing Board that comprises the eleven members of the top management, there is no one with private sector experience in asset management and portfolio allocation. For a financial centre like Switzerland, that is odd.
Movie sequels are rarely as good as the original. While he has a good chance to do so, it is for Schlegel to demonstrate that this one is.
1 To ensure comparability, these are computed on annual Eurostat data on the HICP index.
2 See “Thomas Jordan ist der Star der Notenbank-Welt: Wer aber genau hinschaut, entdeckt Risse im makellosen Bild“ by Lorenz Honegger and Thomas Fuster, NZZ, 15.8.2023 and “Jordan plante Rücktritt seit mehr als zwei Jahren“ by Dirk Schütz, Handelszeitung, 27 March 2024.
3 See https://go.pardot.com/e/931253/-organisation-legal-framework-/49bfj/394474173/h/k9D13mxYEtbHXiTX9rec1ELErfua70FKdcBvfiH4d2c