Switzerland doesn't want the U.K. to leave the European Union, according to Thomas Jordan, the Swiss central bank president. A Brexit will increase the turbulence on the markets.
The upcoming Brexit referendum in the U.K. took a substantial part of the press conference called by Swiss National Bank President Thomas Jordan today in Bern. The potential departure of the U.K. from the European Union fold cast its shadow over the bi-annual conference as the keepers of monetary policy struggle to keep the franc from appreciating against yet another benchmark currency, the pound sterling.
Nigel Farage, the head of the U.K.'s anti-European movement UKIP, frequently highlights Switzerland as a positive example because of its position outside of the EU. This led to discussions in Switzerland that a Brexit might actually be in the interest of the country, because it would gain a powerful partner outside the hegemonic power on the continent.
Don't Leave
The message of the SNB president to voters in the U.K. was crystal clear: «It is in the interest of Switzerland that the U.K. remains in the European Union, because of the instability it creates in an already turbulent market,» Jordan said at the press conference in the Swiss capital of Bern.
Should the British voters decide to leave the union, the Swiss central bank would have to reassess it economic and monetary forecasts and possibly adjust its measures, Jordan added. «Let me be clear: Brexit is not part of the base scenario,» the SNB president said. «In case of Brexit, certain turbulence could arise and we will follow the situation very closely.»
Increased Volatility
The Swiss central bank is preparing itself for Brexit and evaluates measures that would have to be taken to counteract potential exaggerations in the market: «We will take measures to stabilize the market if the situation arises.» Jordan is well aware of the fact that the probability for a Brexit has risen in the past few. The bank has its staff monitoring the market 24 hours a day and will follow the events as they develop.
The preparations of course also mirror the weakening of the pound in recent months as markets are anticipating a potential exit. This weakening in turn has led to an appreciation of the Swiss franc, which already is «significantly overvalued» in the eyes of the central bank.
«The imminent U.K. referendum on whether to stay in the European Union has already caused volatility on the financial markets to rise,» Jordan said.
