1 Given that the sixth anniversary of the collapse of Lehman Brothers passed just a few weeks ago, let me briefly remind you of the hectic events that gave rise to the policy actions of the past few years. The bankruptcy of Lehman Brothers on 15 September 2008 turned what had previously been a crunch in the interbank market into an outright financial panic. In the weeks and months after the collapse of Lehman, the prospect of a second Great Depression was real. In fact, key economic indicators showed worrying parallels in the early stages of the two crises; by  1  Galbraith (1990). BIS central bankers’ speeches  1  January 2009 global industrial output had dropped by more than 10%, global trade by almost 20%, and the global stock market had lost about half of its value. 2 In the 1930s, all three of these indicators continued to fall for another two years, eventually leading to record unemployment of 25% in the United States and around 30% in the United Kingdom and Germany, the second and third largest economies at the time. This, at the end of 2008, was the environment in which policymakers found themselves and the prospect that they were trying to avoid. So how did they react? Almost immediately after the collapse of Lehman Brothers central banks, including the SNB, began to lower interest rates to almost zero.
5  The path was not entirely untrodden: in the 1990s, Japan was facing weak growth and the threat of deflation in the wake of its asset price crash, even though the Bank of Japan (BoJ) had slashed rates to zero. The BoJ thus started to experiment with unconventional monetary policy measures. 2  BIS central bankers’ speeches  certain period of time. Both of these tools are intended to lower long-term borrowing rates and, through that channel, to stimulate economic activity. The SNB is a bit of a special case. In summer 2011, Switzerland was confronted with an excessive appreciation of the Swiss franc as a result of the euro area crisis, an appreciation that continued to the point where it posed a serious threat to price stability. As a result, we resorted to a range of unconventional tools to increase Swiss franc liquidity and – eventually – introduced an exchange rate floor of 1.20 Swiss franc per euro in September 2011. So, are central banks doing too much in terms of unconventional policy? The answer is – again – “no”, but less categorically than in the case of conventional policies. On the one hand, being the only ones left to react to weak economies and high unemployment forced many central banks to take further action – action that was justified by their mandates. On the other hand, the jury is still out on the overall assessment of unconventional policies.