In most countries, however, this mandate is purposely defined in comparatively loose terms, with the main focus on ensuring price stability. As has become evident in the past few years, central banks have considerable room for manoeuvre in implementing this mandate. In response to the crisis, they first lowered interest rates to zero and subsequently eased monetary policy further using new kinds of instruments. At the same time, central banks had to provide the banking system with largescale liquidity assistance to ensure financial stability. As a consequence, central banks’ balance sheets have now reached levels beyond all previous imagination. In addition, many central banks have been given additional responsibilities and have taken on new tasks, in particular in the area of financial stability. The shocks triggered by the global financial crisis did not leave Switzerland unscathed either. The Swiss National Bank (SNB), therefore, had no choice but to move into uncharted waters. During the crisis, maintaining a functioning Swiss franc money market and subsequently stabilising our country’s largest bank were the first priorities. At a later stage, the massive appreciation of the Swiss franc threatened the economy at its core, creating a risk of deflation. The SNB came to the rescue by injecting liquidity into the market, setting up the StabFund, intervening in the foreign exchange market and introducing the minimum exchange rate. Our balance sheet is a reliable indicator of just how intense these interventions were.
Prior to the outbreak of the crisis at the end of 2006, the balance sheet total was just over CHF 100 billion. Today, it amounts to nearly CHF 500 billion. In the area of financial stability, the SNB, too, was entrusted with some new tasks, especially with regard to macroprudential measures. The countercyclical capital buffer as well as the designation of systemically important banks and their functions are probably the most well-known of these measures. On the whole, central banks around the world have thus far been successful in their role as firefighters. They managed to prevent the global economy from falling into a depression and to ensure price stability. In addition, in many countries, they worked side by side with their governments to shore up the banking system. This has bought some time – time that in numerous places should be used to solve the underlying problems. In many countries,  BIS central bankers’ speeches  1  measures that should be undertaken to achieve this include well-designed structural reforms of the economy and comprehensive restructuring of government finances. The downside of the central banks’ success is that it could give the impression that treating the root of the structural problems is not necessary at all.