Swiss monetary policy in the public eye
Jean-Pierre Danthine, Member of the Governing Board
Money Market Event of the Swiss National Bank, Zurich, 24.03.2011
The "Great Recession" has been one of the most severe economic as well as financial downturns in the past 80 years. Central banks played a key role in containing the impact of the crisis by preventing a global economic and financial meltdown. This speech focuses on two elements of the contribution of the SNB in the recent crisis: one deals with a particular feature of the Swiss money market, while the second focuses on the SNB's interventions in foreign exchange markets.
A key element of the Swiss financial market structure that has shown particular resilience and has contributed to providing appropriate financial conditions throughout the crisis is the Swiss franc repo market. This is the most important monetary policy instrument in the SNB's open market operations. The good performance of this market is closely related to the SNB's collateral policy.
The purchase of foreign currency was one of the extra-ordinary tools used by the SNB to combat the financial crisis. These interventions in the foreign exchange market have to be considered in the light of the SNB's mandate. The primary goal is to ensure price stability, while taking due account of the overall economic situation. To achieve its goal, the SNB strives to provide the most appropriate monetary conditions, not to achieve an exchange rate target. The primary indicator of the success of interventions is the inflation rate.