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Using negative interest rates and foreign currency purchases is
particularly important with the Swiss franc in high demand as a
safe-haven investment during the coronavirus pandemic, Jordan
told a virtual event in Zurich.
"We have no signal that the Swiss franc is anything other than
highly valued," Jordan told the event, which was organised by
Swiss bank UBS <UBSG.S>. "Our policy is warranted, and even more
important in the period in front of us," he added.
The Swiss National Bank has been increasing its foreign currency
purchases this year to relieve pressure on the Swiss franc,
which has risen to its highest level in nearly five years
against the euro.
The higher value of the franc damages the SNB's goal of price
stability by pushing down prices and hurts Swiss exporters.
As a result of its interventions, the SNB's foreign currency
holdings have ballooned to 800 billion Swiss francs ($825.59
billion), bigger than the output of entire Swiss economy,
raising concerns about exposing the central bank to massive
losses.
The central bank's balance sheet could be expanded further,
Jordan said, after weighing up the costs and benefits. The bank
could also cut its negative rates from the current level of
minus 0.75%, the lowest in the world.
"We have a big balance sheet, this is true," Jordan said. "As
long as the benefits are bigger than the costs, we should expand
the balance sheet," he said.
"We have room... to cut rates further if necessary. At this
moment -0.75% is the right level for money market rates."
(Reporting by John Revill; editing by Brenna Hughes Neghaiwi)
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