Thomas Jordan: Swiss monetary policy and provisions Introductory remarks by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 10 December 2009. *  *  *  Introduction Tension in the global financial markets began to abate this spring, and has continued to do so ever since – though despite all the talk of recovery, they are still far below their pre-crisis levels. Whereas initial price rises were mostly corrections of previous excessive falls, markets are currently being driven mainly by the improving economic outlook, by companies’ predominantly positive earnings reports and by expansionary monetary and fiscal policies. However, there is still considerable uncertainty in the financial markets. In the course of the crisis the Swiss National Bank aggressively relaxed its monetary restraints, sometimes treading new paths in the implementation of monetary policy. I shall now briefly summarise the instruments that we used in connection with the financial crisis, highlighting their effects on the SNB’s balance sheet. The risks that exist in the SNB’s balance sheet or that the SNB could potentially be required to take onto the balance sheet demonstrate the importance of strengthening our equity capital. I shall therefore, as already indicated by the Chairman of the Governing Board, Jean-Pierre Roth, briefly explain to you the new regulations governing our policy on provisions. One of these monetary policy crisis measures is the SNB’s stabilisation fund (StabFund), which I shall deal with later.
This means that we will assess the effects of these measures and adapt them, if necessary: (1) to confirm that they continue to fulfil their monetary policy objectives; (2) to ensure – within our mandate – that the relevant measures continue to support the decarbonisation path to reach the goals of the Paris Agreement and the EU climate neutrality objectives; (3) to respond to future improvements in climate data and climate risk modelling or changes in regulation; and (4) to look beyond climate and address additional environmental challenges, within our mandate. While I understand it is not a specific topic covered in today's conference, a similar commitment to fully incorporate climate-related and environmental risks applies to our banking supervision tasks and responsibilities. In addition to the climate stress test that was concluded by ECB Banking Supervision earlier this year, we will soon publish the results of our thematic review. As part of this exercise, our core banking supervision teams – Joint Supervisory Teams – thoroughly assessed to what extent banks' risk management practices for climate-related and environmental risks live up to the supervisory expectations we published in 2020. We conducted this exercise to assess where banks stand with regard to our expectations and to highlight any gaps they urgently need to close. We will also take the opportunity to identify and share best practices to help banks close any gaps identified.