Given the relationship between money growth and inflation in the very long run, that means that the rate of inflation has no effect on the real equilibrium. In practice, high rates of inflation have proved highly variable, injecting uncertainty into the economy, which can have real effects. 13  Buiter, W. H., 2006, “How Robust is the New Conventional Wisdom in Monetary Policy? The surprising fragility of the theoretical foundations of inflation targeting and central bank independence”, paper presented at the 2006 Central Bank Governors’ Symposium “Challenges to Monetary Theory”, at the Bank of England. 14  For example, Lucas, R. E., 1987, “Models of Business Cycles, 1985 Yrjö Jahnsson Lectures, Basil Blackwell, Oxford. 15  For the genesis of this term in the literature, see Rogoff K., 1985, “The optimal degree of commitment to an intermediate monetary target”. Quarterly Journal of Economics, November, volume 100, number 4. 16  From the vantage point of being Private Secretary to Governor Leigh-Pemberton (1989-1992), and later as an official implementing policy and then heading the Bank’s Monetary Assessment and Strategy Division. BIS Review 66/2007  3  the Bank would not be able to account for its monetary stewardship on the Floor of the House of Commons. In a Parliamentary system of democracy, it is Ministers who are accountable. 17 Those circumstances are specific to the UK. Other conditions and histories act as constraints elsewhere.
Thomas Jordan: The challenges of the global economic crisis – can Switzerland master them? Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, on the occasion of a panel discussion at the Central Bank of the Republic of Austria, Vienna, 1 February 2011. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  Many countries are facing major economic challenges as a result of the financial and economic crisis. Which of these are of particular importance for Switzerland? And how can we tackle them? Switzerland is currently facing three key challenges. First, the crisis has shown that countries can encounter serious difficulties due to systemically important banks. Switzerland has two systemically important banks, in fact, these big banks are systemically important even at the global level. Thus for our country, in particular, it is essential that the stability of the financial system be sustainably reinforced. Second, the crisis has substantially changed the economic environment in which Switzerland – an economy with an extremely global orientation – operates. On the one hand, our country has to cope with the appreciation of the Swiss franc, particularly against the euro, which has come under pressure because of the sovereign debt crisis affecting certain European countries. On the other hand, the crisis has reinforced the shift in economic power towards the emerging economies.