Nevertheless, this supportive action clearly showed us that systemically important banks are associated not just with advantages, but also with significant risks for the general public. Second, the reputation of the financial industry worldwide has suffered considerably in the wake of the crisis. In the general public at large, the enormous losses, the government rescue packages, the manipulation of the Libor interest rates and the suspicion of improper agreements in the setting of exchange rates, have led to a loss of confidence in the banks. This is true of Switzerland, in particular, where, after all that has occurred, questions relating to the banks’ sets of values and the benefits of a large banking industry for our country are being increasingly raised. Third, the most important pillar of the Swiss banks’ export business – cross-border wealth management – has suffered major reputational damage. For many decades, the practice whereby the assets held by foreign bank customers in Swiss bank accounts included an element of untaxed wealth was tolerated internationally. In recent years, however, this situation has landed Switzerland in politically delicate situations on many occasions and involved several banks in legal disputes. A worldwide change in values and the disclosure of cases of assisted tax evasion have discredited bank secrecy as a legitimate instrument for the protection of the privacy of foreign customers. Its economic importance for the Swiss banks has therefore largely dissipated. These developments have also resulted in considerable legal uncertainty and increased the risk of individual bank export markets disappearing, either partially or completely.

For governments political stability takes precedence to other objectives. Still Central Banks cannot neglect their own mandates. The upshot is that this expansionary fiscal policy will make the work of monetary tightening that much harder. Confronted with many "unknowns", decision makers turn to history to enlighten the course of action. History teaches its lessons not by means of similarities, but rather through differences. For example, the bout of high inflation sweeping across the (western) world today has led many commentators to draw comparisons to the 1970s. On the surface similarities are glaring, notably in relation to energy supply shocks, and in particular the warning that even a one-offshock to prices could cement a structural high inflation regime. But it is essential to bear in mind that the institutional contexts are very different today compared to half a century ago. When inflation began to pick up in the late 1960s/early 1970s, the socio-economic consensus in the West revolved around the "Keynesian paradigm". In the post-war decades, the state actively steered the economy towards full employment. An accentuated interventionist agenda addressed inflation amid restrictions on capital flows and managed exchange rates. Such policies naturally empowered organised labour: unions' significance in the national economy grew and workers were able to extract increasing real wages and benefited from improved standards of living. A wage-price spiral that transformed a one-off shock to inflation into a structural feature of advanced economies. The word stagflation takes us to those days.