At the current juncture, the longer-term risks associated with a massive, uncontrollable expansion of the SNB balance sheet would have been out of proportion to the benefits of continuing to enforce the minimum exchange rate. This does not mean that the SNB will refrain from expanding its balance sheet further, should it prove necessary. Rather, it clarifies that this policy option should be used only when the benefits clearly outweigh the costs. Fiction III: The SNB has unlimited power The drastic actions taken by central banks since the financial crisis – flooding financial markets with liquidity on an unprecedented scale, injecting billions to save banks from failing, or, in the case of Switzerland, intervening heavily in the foreign exchange markets – have led to the widespread perception that central banks have unlimited power. On the one hand, this perception is based on the fact that central banks are entrusted with the note-issuing privilege, i.e. they can “print money”. In view of the current difficult debates about austerity and deleveraging, the tendency to overrate the power associated with this privilege is probably natural. Yet this view overestimates its actual power, for printing money  4  BIS central bankers’ speeches  can only resolve short-term liquidity issues. In the long term, it creates no value and merely generates nominal price increases. On the other hand, the perception that central banks are all-powerful is also based on the fiction that their independence renders them immune to democratic controls.
We want to share the risks and costs with financial institutions in this climate to retain and develop talent. In addition, MAS has also announced that it would set aside $ million to support fresh local university graduates in industry attachments over the next 1-2 years. Closing As an international financial centre, Singapore needs to continually build on its fundamentals. We have to retain and enhance trust and confidence among investors and businesses here by continuing to provide socio-political stability, respected regulatory standards and a wellregarded legal regime. Underpinning all these efforts is a highly skilled and professional talent pool. AXA’s decision to locate its training centre here will therefore go a long way to support this effort. On that note, I would like to extend my heartiest congratulations once again to the AXA Group for the launch of the AXA University Asia-Pacific Campus in Singapore. I wish you every success in this very important endeavour. Have a great evening, thank you. 2  BIS Review 45/2009