However, there is another area in which the Confederation and cantons have made an even more important contribution to the independence of monetary policy. They put the favourable years before the crisis to good use by making their public finances pretty weatherproof. As a result, Switzerland was one of the few countries where government finances did not deteriorate substantially in the crisis. Sound government finances are essential not only for the competitive strength of an economy but also for safeguarding social security institutions – and thus for social cohesion. In the long term, excessive government indebtedness can also endanger price stability and the independence of monetary policy; one reason for this is that it increases the temptation to keep interest rates very low for longer than necessary. At this point, I would like to draw a preliminary conclusion with regard to the SNB’s role in monetary policy. I am firmly convinced that no change is needed in the SNB’s current mandate and therefore with regard to its fundamental role in monetary policy. Our job is to ensure price stability while taking due account of economic developments. This is a sensible and credible mandate. Our clear definition of price stability has also stood the test of time. The SNB equates price stability with a rise in the national consumer price index of less than 2% a year. Deflation – in other words, a protracted decline in the price level – also breaches the goal of price stability. However, we do not react automatically to inflationary developments.

Neither can monetary policy replace a sustainable growth policy, a well-balanced fiscal policy, a well-functioning labour market or an open world trade regime. It is important to avoid any illusions in this respect. Monetary policy cannot assume responsibility for everything. Deeds needed, not just words Alongside the discussions about the right goal of monetary policy, the crisis has also prompted a debate about the best way of communicating this policy. There is general agreement on one point, which is that, in principle, the more unconventional the monetary policy measures, the greater the public’s entitlement to be informed. The distribution effects of unconventional measures differ, potentially, from those of monetary policy using a conventional toolkit. Accordingly, a central bank using these resources must clearly explain why they are absolutely necessary for fulfilling its mandate. The explanation of monetary policy decisions, and the reasons provided, must be as transparent as possible. Monetary policy must be comprehensible for markets, politicians and economic agents. The SNB attaches great importance to this; we therefore endeavour to provide detailed explanations of the reasons for our monetary policy decisions and enter into extensive public dialogue on the topic. Yet for transparency, it is also true that more is not necessarily better in every case. Sometimes transparency can be counterproductive. One example of this is the publication of the minutes of SNB Governing Board discussions on monetary policy decisions. In this respect, it is important to take account of Switzerland’s special situation.