Since every country has its own set of idiosyncrasies, I can obviously not speak for all central banks. I will therefore focus on Switzerland and the SNB. As in other areas of the economy, however, developments abroad affect Switzerland and thus the SNB via the global financial markets. This just goes to show how important it is for us that the right direction for central banks is also set abroad. Role of monetary policy largely unchanged I would now like to say a few words about the central banks’ role in monetary policy. In my opinion, the core mandate should remain unchanged. The SNB’s monetary policy is still credible. The SNB must, as an independent central bank, ensure price stability while taking due account of economic developments. The National Bank Act grants us substantial flexibility in implementing this mandate, and this has made a major contribution to retaining our freedom of action, even under extreme conditions. When the zero bound was reached, we were able to use new instruments swiftly and rigorously even though this was associated with considerable balance sheet risks. As a result, we successfully fulfilled our mandate and ensured price stability. How else, for instance, could we have credibly set and enforced the minimum exchange rate, if the law had imposed restrictions on the SNB with regard to its balance sheet? The key importance of price stability was uncontested for a long time. Now, however, the relatively old discussion about the optimal goal of monetary policy has been fuelled by the crisis.
In Switzerland, this means that as long as the economic recovery remains on track, we should not postpone for too long the process of normalising monetary conditions. Otherwise, we would put medium term price stability at risk. 1/1