The fewer alternatives available, the more serious the liquidity bottlenecks and counterparty risks. An additional aspect relates to the network. It comes into play when a system is the connecting link between other systems, such as in the case of the central counterparty SIS x-clear, which links the trading platform virt-x and the securities settlement system SECOM. The failure of such a connecting link can significantly affect operations at the upstream and downstream systems, even if the link itself is only of minor direct relevance to the market participants. Our analyses led to the conclusion that the following systems should be classified as systemically important: the interbank payment system Swiss Interbank Clearing (SIC), the securities settlement system SECOM, the central counterparty SIS x-clear and the multi-currency payment system Continuous Linked Settlement (CLS). PostFinance is not classed as systemically important. This may be surprising given the economic significance of postal payment transactions, but it is a direct result of the existence of alternatives, ie bank payment transactions, which are instantly available should the postal payment system experience any serious problems. Of the systemically important systems, CLS has been exempted from the minimum requirements as it is already adequately overseen by the Federal Reserve Bank of New York and because the exchange of information between the New York Fed and the National Bank runs smoothly. By strictly avoiding duplications, we can reduce the burden of oversight, ie the density of regulation, also in the case of SECOM and SIS x-clear.
The challenge that lies ahead of us is how to include this new objective in our policy making; whether inflation targeting and financial stability can be combined or whether a new regime altogether is needed. Various new radical approaches have been mentioned so far. However, I believe that we should not discard all the hard-learned lessons and the successes of the past. Stabilizing inflation should be something that central bankers may be proud of, something that we should cherish and continue to strive for. Incorporating financial stability objectives with the inflation targeting regime should be seen as an opportunity to understand economic developments and potential macro-financial risks, to achieve both these objectives and preserve long-run economic stability. I believe the course of the monetary policy will continue to be extensively discussed in the future, including our improved understanding of the role of asset prices and financial frictions. Under the current conditions, the largest central banks in developed countries have stretched central banking theory and practice beyond traditional activities. Their balance sheets have increased beyond imagination and, in some cases, include private assets; they have accepted a much broader role and have assumed more responsibility. This all new and untested type of central banking will have a strong impact not only on the nature of monetary policy and its interaction with other central bank objectives but also on the independence and credibility of the central bank itself.