By TraderVox.com
Tradervox.com (Dublin) – The Swiss National Bank Governor Thomas Jordan has been seen making efforts to widen high fight to protect economy beyond currency markets. He is considering how the central bank can be involved in curbing the booming property market in the country. According to economists in various investment banks, the SNB is likely to act to stem risks from excessive credit growth. If the central bank were to venture into this move, it would have to force financial institutions in the country to hold more capital up to 2.5 percent of their domestic risk-weighted assets. SNB Governor has already promised to do everything possible to protect the 1.20 cap placed on the franc against the euro in the forex market. He indicated that the central bank is ready to make unlimited purchases of foreign currency to protect the franc from strengthening further.
Jordan, who has been involved in boosting capital requirements for UBS AG and Credit Suisse Group AG, is now seen focusing on smaller banks as he tries to curb the drop in property prices in the country. According to Andreas Venditti, who is a Senior Analyst in Zurich at Zuercher Kantinalbank, has indicated that the SNB has given warnings in the recent past about the real estate bubble which is want to see cooling. He indicated that the bank may act before the end of the year. In a SNB Financial Stability Report for June, the central bank called on Credit Suisse, the second largest lender in the country, to boost its capital, pointing out that the mortgage market poses significant risk the country’s lenders. The statement also noted that the country’s Home Loans appreciated by 300billion Francs in ten years, where they gained 5.2 percent in 2011 to reach 797.8 billion francs. This is almost 140 percent of the Switzerland’s Gross Domestic product.
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