Philipp Hildebrand | DES 1990Philipp Hildebrand, Chairman of the Swiss National Bank since 1 January 2010, alumnus and former Visiting Lecturer at the Institute, calls for improved macro-prudential supervision and regulation of the financial sector to protect against impacts of future economic crises. When did you attend the Graduate Institute, which programme did you follow and what are your fondest memories from those years?I attended the Institute from 1988 to 1990 and graduated with a DES in International Relations. I have many fond memories from those years. What stands out most is probably the wonderful collegiality and friendship that characterised our class. How do you think your years at the Institute influenced your subsequent career path?My years at the Institute have influenced my career path in many ways. Most importantly, I became deeply committed to pursuing a professional path, be it academic or otherwise, with a firm focus on global issues. You will take over as Chairman of the Governing Board of the Swiss National Bank in January. Do you expect that the international experience gained at the Institute will be useful to you in that role?I have always been deeply convinced that an international outlook is indispensable for policy-makers in small open economies such as Switzerland. The Swiss economy is strongly impacted by developments in the rest of the world. The current crisis is a case in point, both in terms of its repercussions on our banking system and the recessionary fallout in the economy. One of the downsides of being small is that we cannot directly affect economic developments in other countries. Therefore, we have a tremendous interest in effective international economic governance and cooperation. In this respect, my previous international experience will hopefully be of service in my future position at the helm of the SNB. You mention the challenges brought about by the financial crisis. What were the most important causes of the crisis in your view?The causes that led to the current financial crisis are highly complex. And yet, there are many similarities with previous crises. To make a long story short, the crisis resulted from a combination of over-indebtedness of private households in the US, excessive leverage of financial institutions, a general and pervasive mispricing of risk, and the tremendous growth in the creation and worldwide distribution of highly complex and often totally opaque structured products based on US mortgages. When US house prices started falling in 2007, this triggered a surge in mortgage delinquency rates. The uncertainty as to who would bear the associated losses quickly eroded confidence in the financial sector. The unfolding financial crisis subsequently took on a pro-cyclical dynamic of its own. Deleveraging of financial institutions and the general increase in risk perception led to further declines in asset prices, which in turn led to even more losses in the financial sector, and so on. |
Graduate Institute of International and Development Studies ©The Graduate Institute, Geneva 2012 |
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