* SNB has other measures than outright intervention -Jordan
* Doesn't rule out temporary euro-franc peg
* Speculation Swiss are looking at negative interest rates
* Franc falls around 5 pct vs dollar, euro
* Talk of peg at 1.15 francs to euro
(Edits, adds detail)
By Katie Reid and Catherine Bosley
ZURICH, Aug 11 The Swiss National Bank could
ease monetary policy further without having to resort to
currency interventions to counter a soaring franc, Vice Chairman
Thomas Jordan was quoted as saying on Thursday, as investors
speculated over the bank's next move.
The franc dropped 5 percent against the dollar and the euro
after Jordan declined to rule out any measure that was
compatible with independent monetary policy, including
temporarily pegging the franc to the euro.
Analysts speculated the most likely next step for the bank
would be to impose negative interest rates -- forcing banks to
charge clients to hold their money -- something Switzerland last
saw in the 1970s and which was used more recently by Japan.
The franc's 40 percent surge against the euro since 2008 is
hammering Swiss exporters and worries it could spark a new
recession drove the SNB to slash rates to zero last week. It
took further steps on Wednesday to flood the market with francs.
But the SNB has so far refrained from a return to outright
intervention in markets after a campaign of franc-selling in
2009-2010 saw it rack up substantial losses to little effect,
prompting calls for Chairman Philipp Hildebrand to step down.
"We still have at the moment possibilities to make monetary
policy more expansive without intervening in foreign exchange
markets," Jordan told Swiss newspaper TagesAnzeiger in an
interview, adding that the SNB could further boost liquidity and
was also looking at other monetary policy measures.
Asked about temporarily pegging the franc to the euro --
which the SNB would have to defended through interventions --
Jordan said: "Temporary measures that influence the exchange
rate are part of our mandate so long as they are compatible with
long-term price stability."
In April 2010 the SNB tried targeting a 1.4350 francs per
euro level by buying the cross on dips but ultimately failed.
"Our view is that the scale of FX losses to date ... means
the political hurdle for further FX intervention is very high,"
analysts from Nomura said in a note to clients.
Hildebrand has said permanently tying the franc to the euro
would require a change to the constitution, which enshrines
independent monetary policy, as it would effectively hand
control over interest rates to the European Central Bank.
Credit Suisse economist Fabian Heller was also sceptical
about a temporary peg to the euro: "Given how overvalued the
franc is, it wouldn't make sense at current levels."
The franc was down 5.3 percent against the euro at 1.085 per
euro and 5 percent against the dollar at 1421 GMT amid market
speculation the euro/Swiss franc pair could be pegged at 1.15
Jordan's comments also stoked speculation that Switzerland
could be considering some kind of negative interest rate.
Swiss interest rate futures crossed the 100.0 mark which
shows investors pricing in negative returns for the first time
ever on Wednesday, partially thanks to the SNB's provision of
extra liquidity. <0#FES:>
"The excessive liquidity in the franc is increasingly
growing through our measures and the holding of francs is
becoming increasingly unattractive," Jordan said.
But analysts doubt that the imposition of some sort of
charge in return for holding assets in francs would deter
investors if a global stock market sell-off continues.
"The overall CHF pricing depends significantly on perception
of fear in the macro environment and not small interest rate
differential gains or losses," said Swissquote chief currency
analyst Peter Rosenstreich.
"Should the U.S. or Europe trigger another round of safe
haven flow the marginal deposit fee will not deter investors
from accumulating francs."
In a separate interview with newspaper Le Temps, SNB Board
Member Jean-Pierre Danthine said the central bank was not
excluding any option including interventions or negative
interest rates on offshore deposits.
But he cautioned that some schemes had no legal basis, would
take a while to implement, would be easy to circumvent and would
have to be carefully constructed to be effective, while others
would have very negative secondary effects.
Swiss exports have held up remarkably well despite the
strong franc but the dramatic franc jump in recent weeks casts
doubt on the SNB's June forecast for 2011 growth of 2 percent.
Jordan said the SNB would only produce a new growth forecast
at its regular policy review in September but said he expected a
significant slowdown in the second half.
(Writing by Emma Thomasson; editing by Patrick Graham)