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The Swiss National Bank Scandal: What Does It Mean?
Posted by: Charles Sizemore (IP Logged)
Date: January 10, 2012 08:41AM
Many a powerful man in history has let his romantic life lead to his ruin. Julius Caesar had his Cleopatra, and Paris had his Helen of Troy. The Turkish Sultan Suleiman the Magnificent had his Roxelana, and the ancient Jewish King David had his Bathsheba. And of course, the American President Bill Clinton had his Monica Lewinsky (among others).
Is this how Suleiman felt?
We can now add Swiss National Bank Chairman Philipp Hildebrand to the list. Hildebrand abruptly resigned on Monday amidst a swirl of controversy surrounding currency trades made by his wife. One need not use their imagination to see how the spouse of a central banker might have unfair insider information. Kashya Hildebrand, the chairman’s wife, traded 400,000 Swiss francs in August, just before the bank undertook a major intervention in the currency markets to push down the value of the franc. We may never know if Mr. Hildebrand knew of his wife’s activities or if she rather cynically used her husband for material gain. Regardless, the scandal will no doubt be shocking to the Swiss, who have a reputation for honest administration.
Any news involving a scandal in the Swiss financial sector is bound to generate a lot of attention. Switzerland plays a unique role in the global financial system. Its reputation for stability, discretion, and integrity has helped to make Switzerland the largest “offshore” financial center with an estimated 35% of the world’s private wealth management business. In this article we’ll take a quick look at what the implications will be.
Stocks Discussed: UBS, FXF, EWJ, NSRGY,
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