SNB Speeches

2012-05-14 - Thomas Jordan - Monetary policy in times of crisis. Why central banks talk to one another

2012-05-14T17:45:00+01:00

Mandates differ from one central bank to another. So, too, do the economic structures and business cycles of different central bank territories. These factors speak in favour of an autonomous monetary policy for each currency area. This monetary policy autonomy has proved its value for Switzerland - also in the latest crisis. Nevertheless, central banks do work with one another in a number of different ways. They exchange knowledge on a continual basis, thereby helping to improve the foundations upon which their own monetary policy decisions are made. Central banks are also able to access foreign currencies by concluding swap agreements, allowing them to better counteract liquidity shortages on the international money market in times of crisis. Finally, joint measures can have a strong psychological impact since they signal to financial markets and economic agents that the central banks are speaking with a single voice.

Autonomy and cooperation are not mutually exclusive. On the contrary. In a crisis, good cooperation supports and reinforces the effects of autonomous monetary policy measures. For a small, open economy like Switzerland, in particular, the effectiveness of monetary policy measures can be largely dependent upon acceptance by the international environment. An important example for our country is the minimum exchange rate - an exceptional measure taken in an extreme situation. With this measure, the Swiss National Bank is countering distortions in the foreign exchange market which can be traced back to international events. The minimum exchange rate is accepted internationally because markets, international organisations and foreign central banks have understood the objective and motivation behind it, which they see as justified.

2012-04-27 - Hansueli Raggenbass - President's address to the General Meeting of Shareholders

2012-04-27T10:00:01+01:00

2012-04-27 - Thomas Jordan - Speech at the General Meeting of Shareholders

2012-04-27T10:00:00+01:00

2012-04-10 - Thomas Jordan - Discussion on the topic of the euro/Swiss franc minimum exchange rate

2012-04-10T15:27:09.057+01:00

2012-03-22 - Jean-Pierre Danthine - A world of low interest rates

2012-03-23T08:22:41+01:00

In Switzerland and in most other mature economies, we live in times of exceptionally low interest rates, be they nominal or real, long- or short-term. This state of affairs is nothing new. The downward trend dates back to the 1980s and has accelerated since then, driven, in part, by the cyclical circumstances associated with central banks' responses to the crisis. In the short-run, the determinants of the low interest rate environment are absolutely clear, but the roots of longer-term trends are disputed. Whatever the case may be, world interest rates cannot remain at such low levels indefinitely, not least because the secular and cyclical forces behind this trend are likely to lose their sway. For savers, who are currently suffering, this is good news. As for long-term borrowers, it is important for them to keep in mind that the current low rates do not reflect a 'new normal'.

2012-03-22 - Dewet Moser - Implementing monetary policy in changing times

2012-03-22T18:00:00+01:00

To fulfil its mandate in a difficult environment, the Swiss National Bank (SNB) has adjusted the implementation of monetary policy several times since the onset of the financial crisis. As a result of the SNB's purchases of foreign currency from March 2009 to June 2010, the banking system was flooded with excess liquidity. From mid-2010 to the summer of 2011, most of this excess liquidity was reabsorbed by means of liquidity-absorbing open-market operations. In August 2011, however, it became necessary to take action to counter the exceptionally strong Swiss franc. In the fight against the substantial overvaluation of the Swiss franc, the SNB injected the banking system with copious amounts of liquidity. In so doing, it dropped its liquidity-absorbing stance and used a range of instruments to ensure a broad-based liquidity supply through different channels. Swiss franc liquidity was expanded at unprecedented speed and to an unprecedented extent. Interest rates also reacted strongly, and in some cases even slid into negative territory. However, upward pressure on the Swiss franc remained. Only the setting of the minimum exchange rate at CHF 1.20 against the euro on 6 September 2011 brought about a sustained correction of the exchange rate level. The minimum exchange rate also had a positive effect on the foreign exchange market. Market quality, as measured by various indicators, improved substantially.

Since 6 September, the implementation of monetary policy has been entirely focused on the minimum exchange rate. From an operational viewpoint, the SNB stands ready to buy unlimited quantities of foreign currency at any time to enforce the minimum exchange rate. In the past few years, it demonstrated time and again that it is able to adapt its operations to monetary policy requirements quickly and effectively. The flexibility of our monetary policy toolkit has proven its worth.

2012-03-07 - Hansueli Raggenbass - Statement by Hansueli Raggenbass

2012-03-07T15:30:01+01:00

2012-03-07 - Jean-Pierre Danthine - Statement by Jean-Pierre Danthine

2012-03-07T15:30:00+01:00

2012-03-07 - Daniel Senn - Statement by Daniel Senn (KPMG)

2012-03-07T15:30:02+01:00

2012-02-28 - Thomas Jordan - No end to the debt society without a culture of stability

2012-02-28T18:30:00+01:00

The most recent financial and economic crisis has resulted in an unprecedented rise in public debt. However, a chronic tendency towards deficits and higher indebtedness has already been observed in a number of countries for the past few decades. Excessive public debt has a negative impact on long-term economic growth, and deprives a country of its freedom of action during a crisis. Sound state finances are thus essential for ensuring an economy's competitiveness and maintaining its social security system, and hence also for social solidarity. Last but not least, excessive public debt also poses a serious threat to price stability and monetary policy independence.

Yet how can state budgets be consolidated over the long term? There are limitations on how far fiscal policy powers can be delegated to independent groups of experts. Because fundamental decisions on taxation or expenditure - unlike monetary policy - are aimed at redistribution, they have to be taken at the political level. Even fiscal rules such as a deficit cap or debt ceiling can only achieve a lasting improvement of budgetary discipline if they are supported by a broad political consensus on the advantages of sound finances. Switzerland is a good example of this: thanks to the inclusion of the major political players in government responsibilities, and to the extension of direct democracy processes even to financial matters, a deeply rooted culture of stability has developed. It is this which provides the foundation for the stabilising effect of the well designed and constitutionally anchored debt brake. This has made a decisive contribution to ensuring that federal government finances are in good shape despite the financial and economic crisis.

As a general rule, any efforts to establish a sustainable fiscal policy in countries with debt problems can ultimately only bear fruit if they succeed in fostering a broad-based culture of stability.