The SNB's monetary policy and the Swiss financial centre

Thomas Jordan, Chairman of the Governing Board

Rencontres économiques de Genève, première édition , 03.11.2015

The activities of the Swiss National Bank (SNB) and the Swiss financial sector are closely interlinked. On the one hand, the SNB acts as the bank of banks, providing a stable currency, liquidity and a payment system on which banks rely. By ensuring price stability and contributing to financial stability, the SNB helps create the conditions in which the financial sector can flourish. On the other hand, the financial sector acts as an intermediary between monetary policy decisions and the overall economy. It contributes to an efficient economic system and to the prosperity of our country.

The long-term goals of the SNB and the banking sector usually go hand-in-hand. Monetary stability and a strong financial sector are in our common interest. However, the benefits of Switzerland having its own currency and conducting its own monetary policy can imply substantial costs in times of crisis. Since the beginning of the financial crisis, Switzerland has been particularly heavily affected by international disturbances. The entire Swiss economy has had to adapt to new international monetary conditions and a significantly overvalued Swiss franc. It is crucial for the Swiss economy that the Swiss financial sector adapts to the new environment and meets the current challenges.

The SNB has geared monetary policy to this new and difficult international situation. The goal of the SNB has been to steer policy responses in a way that reduces the painful short-term adjustment costs while preserving the stability achieved over the past four decades of independent monetary policy. The two pillars of its current monetary policy, negative interest rates and foreign exchange interventions as required, serve to reduce the current significant overvaluation of the Swiss franc and to guarantee price stability in the long run.