Speech  Embargo 29 March 2022, 6.30 pm  Macroprudential policy beyond the pandemic: Taking stock and looking ahead International Center for Monetary and Banking Studies  Fritz Zurbrügg Vice Chairman of the Governing Board* Swiss National Bank Geneva, 29 March 2022  ∗  The speaker would like to thank Angela Abbate for her support in preparing this speech. He also thanks Toni Beutler, Robert Bichsel, Maja Ganarin, Jacqueline Thomet and Martin Straub, as well as the SNB Language Services. Dear Professor Panizza, Ladies and Gentleman Thank you, Professor Panizza, for inviting me to participate in the public lecture series organised by the International Center for Monetary and Banking Studies (ICMB) in Geneva. It is a pleasure to be here again, particularly since this is the first lecture after a two-year pandemic-related break. While the effects of the pandemic appear to have subsided, we are currently experiencing another tragic development. I am deeply troubled by Russia’s war on Ukraine and want to express my heartfelt sympathy to the Ukrainian people. In my remarks this evening, I will be talking about macroprudential policy and rising challenges to financial stability, two topics that remain very relevant today. In recent months, policymakers in Switzerland and abroad have left the phase of accommodative macroprudential policy behind. Many jurisdictions have rolled back the easing of bank capital requirements that took place during the pandemic. Furthermore, several countries have actually taken steps to tighten macroprudential policy. What is behind this shift?
Improvement in opportunities for change but … A similar gloss can be applied to the realignment of economic policy from the second half of the 1980s to the middle of the 1990s. There have been a number of reforms aimed at creating stability and opportunities. The credit and currency markets have been deregulated, components of the social security system have been reformed, a tax reform has been implemented, targets have been established for government finances, price stability is enshrined in law and the Riksbank has been given an independent status. All this represents good possibilities of the Swedish economy facing a stable future as we step over the threshold to a new millennium. The question is, however, whether the new information technology will be implemented in the far-reaching ways that are necessary in order to reap the really large benefits. Let us look at another period in Sweden’s economic history when things did not go quite as well. After World War II, when activity in the industrialised countries recovered and competition grew, partly because trade barriers were lowered, it became necessary to realign production in Sweden. The need for change resembled what we are beginning to discern on the horizon today. For much of this post-war period, however, wage costs rose at a rapid rate. Profitability in Swedish business was accordingly under pressure from two fronts: growing competition from the rest of the world and rising wage costs.