And, partly, it is because some investors may choose to switch to cash if the level of interest rates becomes too low. 11 See, for example, De Rezende and Ristiniemi (2018). 14 [25]  If quantitative easing is to be a part of the permanent monetary policy toolbox, it would be an advantage if the instrument could be used more systematically than has been the case during the crisis. Much of the development of the monetary policy analysis has focused on the importance of a systematic approach and communication – and this should also apply to new instruments, again to influence expectations in the outside world as much as possible. In addition, the central banks need to find clear strategies for how they can reduce their holdings of financial assets when economic activity improves and inflation rises, to avoid their balance sheets increasing with each recession. Forward guidance to influence expectations of future interest rates Ever since 2007, the Riksbank has engaged in a form of forward guidance, by publishing, in each Monetary Policy Report, its best assessment of the future development of the repo rate, inflation and the real economy. This is a matter of convincing the market of where we believe the economy and repo rate are heading. Even if it is difficult to make forecasts and we have often believed that interest rates would rise faster than was actually the case, communication about the future has still been useful, particularly over the shorter horizon.
Therefore, it seems rather intuitive that a “Swiss-made” monetary policy would potentially fit Switzerland’s needs better than a “one-size-fits-all” European policy. The latest recession is a case in point. The investment spree of the late nineties created a massive worldwide capital overhang. The collapse in asset prices, in 2001, and the ensuing worldwide recession had a particularly strong impact on Switzerland, whose exporters are specialized in the production of capital goods and where the production of financial services represents about 13% of GDP. Because ensuring price stability means avoiding deflation as well as inflation, the SNB had to cut interest rates much more aggressively than the ECB from March 2001 to April 2003. The case of Switzerland is not unique in this respect. Canada, Australia, New Zealand, Norway, Sweden and the UK, for instance, also let their currencies float and pursue successful national monetary policies. They all follow a clear strategy of preserving long-term price stability, and they all have an independent central bank pursuing an independent policy. So we can definitely say that monetary independence and monetary stability are two sides of the same coin. 4  BIS Review 70/2004