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During Thomas Jordan's tenure as President, the Swiss National Bank successfully maintained price stability, thereby fulfilling its core mandate. However, his monetary policies also led to a significant expansion of the SNB's balance sheet, which some view as a potential liability.

When Thomas Jordan delivers his final monetary policy decision tomorrow, market attention will focus on whether the key interest rate will be cut by 0.25 percent as expected, continuing the gradual reductions that have been in place since March. A more substantial 0.5 percent cut, in line with recent moves by the U.S. Federal Reserve, remains possible but would need further explanation, especially since the Fed only started its easing cycle last week.

In addition to the interest rate decision, the Swiss National Bank's (SNB) inflation forecast and economic outlook will also be in focus. The press conference will serve as Jordan's public handover of power. By the end of September, he will leave the SNB and its policy committee. Martin Schlegel, the current vice president, will take over as chairman, with Antoine Martin moving up to vice president and Petra Tschudin joining the executive board.

A Record of Success: Maintaining Stability Through Crises

Jordan's departure marks the end of an era. He joined the SNB in 1997, became a board member in 2007, and has led the institution since 2012 after an abrupt leadership change. Under his leadership, the SNB largely succeeded in keeping inflation within its defined range—an average annual inflation rate below 2 percent but not negative.

Internationally, Switzerland has fared well in terms of inflation and price stability, and the SNB effectively mitigated the economic impacts of various crises, often caused by external factors. However, assessing the SNB's role in the Credit Suisse crisis is more complex. The central bank provided the failing institution with a 100 billion francs ELA+ loan, which violated a long-standing principle by economist Walter Bagehot regarding central bank lending during crises.

Favorable Structural Factors

It’s important to remember that the SNB (Swiss National Bank) is just one of several players in ensuring financial stability, and in times of crisis, the Swiss Federal Council often has the final say. This is in contrast to monetary policy, where the SNB’s governing board holds sole responsibility.

One can, as independent economist Adriel Jost noted in his analysis featured by finews.ch, question whether Switzerland's relatively mild inflation in recent periods is due less to the SNB's monetary policy and more to structural factors such as sound fiscal policies and a favorable energy mix compared to other countries.

A Central Banker at Heart

When evaluating Jordan's legacy, it is essential to remember that the SNB is an institution with decades of accumulated expertise— far from a one-man show. While Jordan may have been the public face, the institution's long-standing principles and processes guide its operations. Additionally, as chairman, Jordan was merely primus inter pares (first among equals) within the executive board. Nevertheless, his deep expertise and long-standing experience at the SNB positioned him as a key figure within the decision-making body.

No Major Mistakes, A Strengthened Institution

Regardless of perspective, Jordan's record is commendable. He consistently kept the SNB focused on fulfilling its legal mandate, communicating this focus externally in a sober, credible manner. Even if favorable structural factors contributed to the SNB's success, Jordan’s tenure avoided any significant policy errors, leaving a strengthened institution to his successor.

One of Jordan’s legacies is the significant expansion of the SNB’s balance sheet, which grew from 100 billion francs pre-financial crisis to 823 billion francs by mid-2024. This increase reflects the SNB's extensive foreign currency purchases aimed at curbing the appreciation of the Swiss franc.