The much stronger monetary policy reaction, a greater willingness to run fiscal deficits and incomparably larger amounts of support to the financial sector are the distinctive features of the present crisis. Monetary and fiscal policy were both restrictive in the Great Depression. The opposite is the case in the Great Recession; both have been and continue to be very expansive. Stabilisation packages to help the banking sector have been very large, while they were non-existent in the early thirties. It will be hard to argue that these policy responses have not played a crucial role in avoiding a repetition of the Great Depression. Of course, expansive fiscal policies, support measures to the financial sector and unconventional monetary policies do not come for free. This can be seen in the increase in public debt levels registered in many countries and in the size of, and the corresponding risks present in, many central banks’ balance sheets. What in turn are the reasons why, in Switzerland, the Great Recession took the form of a “relatively severe recession”? A number of factors, some of which were already hinted at in my Money Market speech last year, were surely at play: the sound condition of the Swiss economy when it entered into the crisis, the demand impulse provided by immigration, the absence of a real estate bubble, strong private savings ahead of the crisis, and, last but certainly not least, a very expansionary monetary policy response completed with a determined and calibrated support to one of our big banks.
However, these numbers are estimates given that almost all of the repo transactions are conducted over the counter. See also IMF (2010), Global Financial Stability Report, October 2010. 2  BIS central bankers’ speeches  there is no new information but only the application of the existing and published criteria. Compared to many other central banks, the definition of eligible collateral is unusually open in the sense that the SNB is rare among central banks in accepting securities denominated in foreign currencies and not only in its home currency, the Swiss franc. The quid-pro-quo of this multi-currency policy is that securities eligible for SNB repo transactions must satisfy stringent quality requirements: these requirements concern their credit ratings and liquidity properties. This policy is coherent – open but strict! – and it has substantial advantages. First, no initial margin or haircut is applied during standardised repo transactions, making the system more capital efficient.8 Second, it allows a broad range of financial institutions to participate, including many international banks. Third, it creates incentives for banks to hold high-quality, liquid assets in their balance sheets. Finally, as already suggested, this highly credible collateral policy has resulted in SNB eligible collateral becoming the standard for the secured interbank money market in Swiss francs. This, in turn, has made an essential contribution to creating a robust secured interbank market and thereby keeping interbank credit lines open at all times during the crisis. II.