With multiple policy objectives and a challenging economic environment, macroprudential tools have given additional degrees of freedom to Asian policymakers who want to avoid a build-up of financial imbalances and unsustainable asset prices, but do not want to give up domestic monetary sovereignty, allow excessive exchange rate appreciation, or impose capital controls. 43. While these targeted interventions have achieved a measure of success, macroprudential policies in Emerging Asia have been deployed in a relatively eclectic and even ad-hoc manner. As these countries return to more normal times, there is a need to  BIS central bankers’ speeches  5  formalise and institutionalise the modus operandi of these policies, for greater transparency and policy effectiveness. Reforms to strengthen the underlying potential of economies 44. Let me now turn to the last, and perhaps most important, set of policies that will determine how successfully the global economy secures a return to normalcy. These are the structural reforms needed to strengthen the underlying potential of economies. Let me highlight those which I think are most important. Advanced economies: labour reform, tax reform, pension reform 45. In the advanced economies, I would put labour market reform, tax reform, and pension reform at the top of the list. 46. Labour markets need to become more flexible, especially in Europe. Even in the US, production patterns are changing rapidly, increasing skills mismatches and generating structural unemployment.
Thomas Jordan: Does the Swiss National Bank need equity? Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, to the Statistisch-Volkswirtschaftliche Gesellschaft, Basel, 28 September 2011. *  *  *  The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). The Swiss National Bank (SNB) had to report heavy losses for 2010 and the first half of 2011 due to the strength of the Swiss franc – or, more precisely, due to valuation changes on its foreign currency reserves. Consequently, it suffered a substantial reduction in its equity. Understandably in such a situation, concerns began to be voiced in public. Questions often posed in this context include: Might the SNB lose its capacity to act as a result of a negative equity level? And, if its equity were negative, would the SNB have to be recapitalised, or might it even have to go into administration? The short answer to these questions is “No”, because the SNB cannot be compared with commercial banks or other private enterprises. For one thing, a central bank cannot become illiquid. This means that a central bank’s capacity to act is not constrained if its equity turns negative. Moreover, unlike other enterprises, it is not forced to implement recovery measures or go into administration. For another, central banks enjoy a funding advantage over private companies, owing to their banknote-issuing privilege. Moreover, they generate surplus income over the long term.