Yesterday, when we reported that the SNB had hinted at that most dreaded of possibilities for central planners, one which always implies full loss of central bank credibility, namely capital control, for some inexplicable reason various readers and even contributors ("Another misleading headline by the Tylers. What yellow journalism") got offended that we dared to point out that the central bank which two days before it crushed FX traders by ending its CHF cap had sworn that "we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy."
Turns out "yellow journalism" as some call it - usually those who have conflicts of interest and/or put trades in the opposite direction - was spot on once again. Because if yesterday, the SNB's Jordan merely hinted at capital controls when as he was quoted by Bloomberg (not Reuters), as saying that capital controls "was not a measure that is at the forefront at the moment",which as we explained "the best way to admit the possibility of capital controls is to not explicitly, and unequivocally reject them. That there is even a possibility of capital controls in a central bank's arsenal, and everyone suddenly begins to pay attention" then today the head of the largest Swiss cantonal bank, and the fourth largest Swiss Bank, the Zurich Cantonal Bank or ZCB, came out and explicitly said what so many fear (and which warning they would ascribe to as the case may be "yellow journalism"), namely that "lowering Swiss National Bank’s already negative interest rate further or implementing capital controls would be "dramatic" but "certainly possible."
This is what Zuercher Kantonalbank CEO Martin Scholl said in interview with newspaper Neue Zuercher Zeitung am Sonntag.
And just so readers (and so-called contributors) can blame the NZZ of fanning "yellow journalism" here is the explit quote from the interview:
Würde sich das ändern, falls die Nationalbank die Zinsen noch weiter ins Negative drückt?Die SNB soll die Massnahmen ergreifen, die langfristig aus ihrer Sicht für die Schweiz sinnvoll sind. Sie könnte noch einmal an der Zinsschraube drehen oder Kapitalverkehrskontrollen erheben. Das wäre in einer globalisierten Wirtschaft zwar dramatisch, aber sicher denkbar. Es ist nicht an uns, Ratschläge zu erteilen.
And in English:
The SNB will take the measures which, in their view are meaningful for Switzerland in the long term. You could again turn the interest rate screw (lower rates) or raise capital controls. That would be in a globalized economy is dramatic, but certainly possible. It is not up to us to give advice.
Why? Because admitting that anything is possible is the only option when your central bank has begun to lose control, and yes: it is up the SNB's Jordan to make the decision on his own: a decision which as he said is not at the forefront "at the moment." What about the "next moment", in the proverbial "tomorrow", if and when as Alan Greenspan predicted earlier today, Greece exits the Eurozone, and Switzerland is flooded with fresh billions in capital rushing to find a place where it won't be denominated into the New Drachma, or New Lira, or New Peseta?
Or perhaps the same outraged readers expect to get an explicit warning from the SNB that beginning on date X all flows of (EUR and/or New Drachma) capital into Switzerland will be halted until further notice(just like Denmark's recent and "completely expected" halt of bond issuance in attempting the first bizarro QE when instead of boosting demand it would push the price of its longer-dated bonds higher by ending their supply).
As usual, we merely present what's out there, as crazy and illogical as it may seem to those who are still unaware that in the NIRP Normal, where as Zero Hedge for years, and most recently Russell Napier explained central banks are losing control, anything goes. It is up to others to decide how to best make use of the available information, or not at all.
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