Jean-Pierre Roth | PhD 1975

Former Chairman of the Swiss National Bank, President of the BCGE

 

Born in 1946, Jean-Pierre Roth received his PhD in economics from the Graduate Institute. He then went on to study at the Massachusetts Institute of Technology (MIT). Upon his return to Geneva he became a lecturer at the University of Geneva and the Institute. He joined the Swiss National Bank (SNB) in 1979. On 1 May 1996, he was appointed Vice-Chairman of the Governing Board and on 1 January 2001 he became Chairman of the Governing Board and Head of Department I responsible for economics, international, legal and administrative affairs. Jean-Pierre Roth has had an illustrious career. He is also a Governor of the International Monetary Fund and was Chairman of the Board of the Bank of International Settlements in Basel, until February 2009. In 2007 he was appointed Switzerland’s representative to the Financial Stability Forum, an international financial body charged with overseeing regulation of the world financial system. Jean-Pierre Roth will retire from the SNB on 31 December 2009. He will be succeeded by fellow colleague and Graduate Institute alumnus, Philipp Hildebrand.

How can similar developments be avoided in future?

It is an illusion to think that we will ever be able to avoid financial crises. But we can learn from the present crisis in order to reduce the frequency, severity, or spill-over to the real economy of future financial crises. One of the lessons that we have learned is that we need to strengthen the regulation of the financial sector, so that our banks will be more resilient to future shocks. But we also need to be better at monitoring and addressing potential systemic risks in the financial system. This means that we need to enhance macro-prudential supervision and regulation, as opposed to micro-prudential regulation, which is concerned with the stability and resilience of individual banks. The macro-prudential approach addresses the stability and resilience of the system as a whole. Here, central banks clearly have an important role to play in the future. We have to accept that a mere focus on price stability as measured by the headline CPI is too narrow a definition of what we should be doing. We have already come a long way in strengthening capital and liquidity requirements here in Switzerland. But more needs to be done. For example, the crisis has made it clear that certain banks around the world have developed into such large and interconnected institutions that they cannot be allowed to fail without jeopardising the stability of the entire financial system. This too-big-and-interconnected-to-fail problem is of particular concern here in Switzerland and it has to be dealt with.