But at least they provide a conditional assessment of how much we expect our rates to increase in order to bring down medium-term inflation to our 2% target. 11  See Brainard, W. C. “Uncertainty and the Effectiveness of Monetary Policy”, American Economic Review 57 (2), pp. 411–425, 1967. 12  It will depend on the degree of persistence of the shocks that hit the economy, as shown by Ferrero, G., M. Pietrunti, and A. Tiseno. “Benefits of gradualism or costs of inaction? Monetary policy in times of uncertainty”, Banca d’Italia Temi di Discussione (Working Paper) No 1205, 2019. 13 See Söderström, U. "Monetary Policy with Uncertain Parameters," The Scandinavian Journal of Economics, vol. 104(1), pages 125-145, 2002. 6  Banco de España staff have conducted such an exercise using a suite of macroeconomic models. The exercise assumes that ECB rates increase linearly until March 2023, and then stay there for most of 2023 and 2024.14 The level of short-term interest rates in March 2023 consistent with a 2% projected inflation rate by end-2024 would be the terminal rate. The results show that, on the basis of current information, the median terminal rate value across models is at 2.25%-2.50%. Indeed this is estimated with significant uncertainty, as illustrated by the wide range of the estimated terminal rate across models15. Let me emphasise, in particular, that these models cannot capture the risk of expectations becoming unanchored or the severity of second-round effects and how they are affected by changes in the terminal rate.
The aim is not to infringe on FINMA’s jurisdiction. Instead, FINMA and the SNB need to clearly define how the new responsibilities and tasks arising from the urgent need for more rigorous analysis and regulation of systemic risk should be divided between them. At this point, I also want to stress that this macroprudential task does not call into question the SNB’s primary mandate, which is the maintenance of price stability. Instead, it supports the long-term fulfilment of this mandate. The SNB has also expressed its opinion – along the lines of this proposal – on the recommendations made by the business audit commissions of the National Council and the Council of States in their report on the financial crisis. 2  BIS Review 173/2010  SNB balance sheet risks In my following remarks, I would like to look at the SNB’s balance sheet risks. As the Chairman of the Governing Board, Philipp Hildebrand, has already mentioned, it was primarily the large-scale purchases of foreign currency that contributed to the expansion of our balance sheet to its current level of approximately CHF 280 billion. Of this amount, CHF 260 billion is made up of currency reserves, which comprise not only foreign exchange, but also gold and the IMF’s special drawing rights. If we add to that the SNB’s loan to the stabilisation fund, over 95% of our assets are denominated in foreign currency. Not only is the balance sheet longer as a result, it also carries more risk.