Safeguarding the principles of regulatory policy

Thomas Jordan, Chairman of the Governing Board

University of Lucerne, Lucerne, 23.09.2022

Discussions surrounding regulatory policy have faded somewhat into the background. For the Swiss National Bank (SNB), however, two principles of regulatory policy in particular remain of great significance: independence from politics and a mandate that concentrates on ensuring price stability. Both of these closely related principles are firmly anchored in the legislation of many countries - and in Switzerland too.

In recent years, these principles have been consciously or unconsciously questioned by some in politics and among the public. For example, there have been calls from politicians for the SNB to directly finance government tasks. It is likely that these demands are tied above all to our high profits in the past few years. However, the good results were achieved during an exceptional financial market environment. This environment has now changed sharply. The SNB's loss for the first half of 2022 underlines that a larger balance sheet is accompanied by larger fluctuations in absolute terms in the annual result, and that substantial profits can be followed by substantial losses.

The direct financing of government tasks by the SNB is not in keeping with the principles of regulatory policy. Monetary policy decisions thus inevitably take on a political dimension, thereby endangering the SNB's independence. Furthermore, the direct financing of government tasks blurs the clear focus of monetary policy on price stability and creates unnecessary conflicts of interest.

The current high inflation underlines the importance of the SNB's focus on ensuring price stability. Price stability is the most important contribution the SNB can make to our country.