GENEVA (Thomson Financial) - Swiss central bank chief Jean-Pierre Roth sharply criticised the US economic system in an interview published Sunday, after the home loans crisis that caused turmoil on world financial markets.

"Something unbelievable happened," Roth said in an interview in the Swiss newspaper NZZ am Sonntag.

The chairman of the Swiss National Bank indicated that he did not foresee a swift end to the crisis triggered by the US sub-prime, or high-risk, home loan market in the United States.

Dozens of US mortgage lenders have been put out of business and major US and European banks have also taken a hit, making them more wary about granting new loans.

Roth told the newspaper that many questions remained unanswered, generating a high degree of volatility and mistrust.

"We're certainly not at the end of the story with developments in the US mortgage market. The source is bad loans."

"People there who had neither income nor capital got credit with very attractive conditions that could only be tightened with time," he added.

Roth underlined that the situation was encouraged throughout the US economic system from financial institutions that set up structured products covering such lending, to ratings agencies that gave their seal of approval.

"And now we're seeing that there isn't a market for such papers. Now reality is striking back. That leads to massive losses and there will be victims," he added.

Roth said the turmoil had had no impact on inflation in Switzerland. He underlined that the bank's interest rate policy would be dictated by the economic outlook, which was generally "positive" in Switzerland.

The economic climate in Europe was "robust", while Asia remained "dynamic", he added.

"There are certainly some question marks now surrounding the development of the American economy," Roth said.

Central bankers repeatedly warned about the under-pricing of risk on financial markets and the state of the sub-prime market over the past year.

Roth said he regretted that the problem had not unwound a year earlier, which would have left an opportunity for a softer landing.

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