Hildebrand’s farewell dinner

 
City A.M. Reporter
AT A discreet farewell dinner in Davos for Swiss National Bank chief Philipp Hildebrand, a handful of guests including central bankers past and present were handed blank sheets of paper.

Before they began eating they were asked to write down the probability, in their view, that the euro would collapse in the next five years, according to two of those present at the meal. They were also asked what likelihood they thought financial markets assigned to such an event.

The result, announced at the end of the dinner, can hardly have helped the Europeans’ digestion.

On average the guests – from Switzerland, the Eurozone, North America and Latin America – saw a 21 per cent risk of the 17-nation single currency breaking up in five years, one participant said. They concluded markets envisage a 35 per cent chance the euro will not exist in its current form.

It was not possible to corroborate the figures with other diners who cited the private nature of the event. Some declined to reveal the content of the discussions at all.

The straw poll among current and recently retired policymakers reflected a wider mood of short-term relief tinged with longer-term doubt among the world’s movers and shakers at this year’s World Economic Forum session in the Swiss Alps.

In contrast to pre-Christmas fears of an imminent breakdown, few now expect the euro to blow up suddenly this year after the European Central Bank flooded banks with cheap long-term money.

“We know for sure that we have avoided a major, major credit crunch, a major funding crisis,” ECB chief Mario Draghi told Davos delegates.