In contrast to the ECB’s two-pillar strategy, the SNB decided at the time to adopt an integrated approach. For the purpose of today's discussion, I would like to highlight two important elements of the SNB’s monetary framework. First, communication considerations were an important element in the design of the new framework. Clearly inspired by the early inflation targeters, a definition of price stability and a quarterly inflation forecast became the primary communication tools with regard to monetary policy. These were considered to be clearer than the alternative of attributing a specific role to monetary aggregates. In other words, the two pillar model of the ECB was rejected primarily on the grounds of communication considerations. Second, the new monetary framework was deliberately designed to allow sufficient room for judgment and flexibility in the conduct of policy. The inflation forecast as the main indicator for policy decisions is derived from a "portfolio" of models and indicators. Some of these models contain monetary aggregates; others don’t. The weights assigned to different models and indicators are allowed to vary over time as their reliability and applicability may also vary across different economic situations. Empirical studies backed the "portfolio of models" approach. Empirical evidence drawing on six years of Swiss data suggests strongly that combining inflation forecasts from different models and specifications improve the forecasting accuracy of the SNB’s inflation forecasts. 3 Of course, the SNB does not claim to have solved the fundamental problem of linking monetary and non-monetary analyses.

paper, the monetary and non-monetary signals were reconciled through an analysis of portfolio shifts driven by the near-zero interest rate policy at that time. Understandably, some of you might be concerned that not giving a prominent and distinct role to monetary aggregates could lead to relegating money to an insignificant role in the decision making process. This is not the case. To the contrary, I would argue that the SNB’s "plurality of approaches" concept guarantees that money will retain an important role in policymaking, as long as money provides useful information for subsequent inflation fluctuations. There are theoretical as well as empirical studies which indeed suggest that money provides useful additional information for subsequent price developments. 4 Using Swiss data, empirical work conducted at the SNB show that money growth rates and deviations from an estimated money demand equilibrium contain useful information for both short- and long-term Swiss inflation developments. 5 Similarly, a more recent study, again drawing on Swiss data, finds that money growth adjusted for changes in the equilibrium interest rate has a significant and proportional influence on subsequent inflation developments relative to information in output and interest rates. 6  4. Money and long-term financial imbalances  Let me conclude by stressing a final point, which strikes me as being worth emphasizing more prominently in the Fischer et al. paper: the role of money beyond a medium-term inflation forecast. Clearly, the relevance of money extends beyond the medium-term. Several recent studies have discussed the relationship between monetary aggregates and asset prices.