First and foremost, Swiss National Bank vice-chairman Martin Schlegel does not want to see Switzerland's financial stability eroded. He examines inflation and the situation with UBS and Credit Suisse.

«Our priority is crystal clear. That is price stability,» Swiss National Bank governing board member Martin Schlegel said on Swiss broadcaster SRF's «Ecotalk» (in German) program Monday evening. To ensure it, «we have always said we will continue to raise interest rates if necessary.» 

The SNB will make every effort to ensure inflation returns to the target band between zero and two percent. «The interest rate level in Switzerland is 1.5 percent, which is not high. We don't see any signs at the moment that this could endanger financial stability in Switzerland,» he said, 

Selling Foreign Currency

Swiss consumer prices in Switzerland moderated in March to 2.9 percent a year-over-year comparison showed, down from 3.4 percent in February. For the full year, the central bank expects inflation to reach 2.6 percent.

Schlegel signaled a willingness to support the Swiss franc exchange rate by selling its foreign currency holdings which the SNB began ramping up sales last fall. A strong franc is a weapon at the disposal of the SNB to limit imported inflation via higher prices for foreign goods.

Currently, a majority of economists expect the SNB to increase its benchmark rate by 25 basis points when it next meets in June.

The Best of Bad Solutions

Commenting on the takeover of Credit Suisse by UBS, Schlegel stressed the urgency of the situation at the time. «Credit Suisse as a global systemically important bank would have been insolvent on Monday (March 29). Never before has such a bank become insolvent.

There was a huge risk of a global financial crisis.» Along with the federal government and the Swiss financial regulatory authority, a deal was put in place on the evening of Sunday, March 19 to save Credit Suisse. 

He said authorities had been working on various solutions for several months. But «in the end, the federal government came to the conclusion that this was the best solution. But one must say it was the best solution among bad solutions,» he said.