Swiss central bank puts price stability before climate change

The SNB says it has better tools to tackle inflation than climate change. Keystone / Anthony Anex

The head of the Swiss National Bank said the central bank should focus on its price stability mandate rather than trying to wade into climate change policy.

“The key contribution of the SNB to the sustainability of Switzerland is in price stability,” President Thomas Jordan said on Wednesday evening at an event in Lausanne. “For this, we have the instruments.”

The SNB, like other central banks, has come under pressure from activists and politicians to do more to speed up the greening of the economy and of the financial system. But Jordan said that technocratic institutions have little power to directly influence consumers and investors toward more environment-friendly habits.

“The vast majority of the Swiss population agrees that price stability is important,” he said, while it would be “difficult” to get a mandate for environmental concerns.

The SNB faced protests at its annual general meeting this year calling for more responsible investment choices. Activists demanded that the central bank use its 700 billion-franc ($760 billion) chest of foreign-currency reserves to foster climate goals. Jordan turned them down on that occasion, saying that the central bank’s sole mandate is price stability.

On Wednesday, he warned of the risk of potential conflicts of interest with the SNB’s monetary policy mandate if the central bank’s balance sheet is used to promote environmental goals.

“We shouldn’t bet on that portfolio to save the planet,” he said.

The speech in Lausanne was the central bank’s chief first public appearance since the SNB last week surprised investors by halting interest-rate increases.

©2023 Bloomberg L.P.