Thomas Jordan: Monetary policy in the financial crisis – measures, effects, risks Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Swiss Banking Global Symposium, Zurich, 16 November 2012. *  *  *  The speaker thanks Mathias Zurlinden for his support in preparing this speech. He would also like to thank Katrin Assenmacher, Rita Kobel and Peter Kuster for their helpful comments, and also extends his thanks to the English Language Services. When the Swiss Bankers Association was founded 100 years ago as Vertreter des schweizerischen Bankgewerbes, or Representatives of the Swiss Banking Trade, this step was warmly welcomed by the Swiss National Bank (SNB). Surprisingly, perhaps, the senior representatives of the SNB were even members of the Association between 1916 and 1937. Since that time, of course, the role and the tasks of central banks have changed significantly. It would be unthinkable for the SNB nowadays to belong to a private sector interest group. Nevertheless, I am happy to observe today that the relationship between the SNB and the Swiss Bankers Association has remained good and reliable over the years. The Swiss Bankers Association has been a key dialogue partner for the Governing Board on all matters relating to the financial centre, and continues to be so. My topic today is the monetary policy which central banks have pursued during the past few years to manage the financial and economic crisis.
To receive an LOLR credit, a bank must on the one hand be systemically relevant and, on the other hand, be solvent and able to furnish sufficient collateral. Without collateral, the National Bank cannot grant any credit. This fundamental principle is enshrined in the National Bank Act. By disclosing our terms to the banks in advance, we are eliminating any possible misinterpretation of the liquidity risks and helping to ensure that preparations are in place for a liquidity crisis which can never be ruled out altogether. This is what we refer to as “constructive clarity”. Conclusion To sum up, I would like to reiterate that the situation of the Swiss financial system is stable. However, this gratifying conclusion should not allow us to rest on our laurels. Maintaining a stable financial system in the long term calls for constant efforts to prevent and cope with crises. While this challenge must primarily be met by the private sector, the authorities can, should and must support its efforts. Financial Stability Report 2004 (424 kb)  BIS Review 39/2004  3