The “comply or explain” principle is a powerful tool In my view, the ESRB has had a better start than might have been expected, given its size and composition. It has focused not only on identifying risks, but also on suggesting how to handle them. And the risks discussed have been the relevant ones, in spite of their political sensitivity. Certainly, a lot remains to be done before the ESRB will have established its working procedures. And it remains to be seen what it will be able to produce under normal conditions, out of the present crisis mode. But, properly managed, it should develop into a useful institution, forcing countries and authorities to act in time to avoid difficult and dangerous situations. Comply or explain is a powerful tool, if respected. BIS central bankers’ speeches  7
Although economic developments are favourable, inflationary pressures remain low. Moreover, the Swiss franc remains highly valued and the situation on the foreign exchange market is still fragile. Against this backdrop, the contours of a ‘new normal’ are emerging for central banks. While there are still many significant unknowns in the political, geopolitical and economic arenas, one thing is certain: the environment in which the central banks operate has evolved considerably, mainly due to structural changes. Some of these changes had already begun well before the crisis, but they have accelerated in the intervening period. I am thinking here of the digitalisation of the economy, for example, as well as the emergence of new technologies on the financial markets. In this speech, I would like to outline how the SNB has had to adapt – and continues to adapt – to make sure it is always in a position to fulfil its mandate.