Several critics claim that, by implementing measures such as quantitative and credit easing, central banks have, at times, adopted “quasi-fiscal” policies and that the boundaries between fiscal and monetary policy were, thus, blurred. Yet, central bank independence is a delicate democratic concept. Its objective is to prevent temporal inconsistencies in the policies pursued from leading to results that could harm the economy as a whole. In other words, independence enables central banks to focus on price stability in the long-term interests of a country, as opposed to prioritising the short-term demands of specific political or economic interest groups. At present, the use of unconventional measures is largely motivated by the fact that monetary policy is at the zero lower bound and fiscal policy options are very limited. These are exceptional responses to exceptional circumstances and should remain so. Finally, it is important to acknowledge that, by expanding their balance sheets, central banks have had to assume increased financial risks. Many central banks have purchased bonds when interest rates were very low. They are therefore exposed to considerable interest rate risks, which could lead to significant balance sheet losses and even to negative equity positions. In the short term, this is not a problem as it does not affect a central bank’s capacity to fulfil its mandate. After all, as a central bank has banknote-issuing privileges, it cannot become illiquid. Moreover, it is normally in a position to rebuild its equity in the longer term.

In this respect, it is important to emphasise that monetary policy considerations always take precedence over those regarding the SNB’s balance sheet risks. It is therefore worth repeating that there is a very high level of uncertainty in the international environment. An appreciation of the Swiss franc would again expose the Swiss economy to considerable risks and, once more, endanger both price stability and economic situation. Given this state of affairs, the SNB will continue to enforce the minimum exchange rate with utmost determination and, should the economic outlook and the threat of deflation require, is prepared to take further measures at any time. Concluding remarks In closing, I would like to summarise my message. The unconventional measures the SNB and several other central banks continue to implement are tailored responses to exceptional circumstances. Their impact should nevertheless not be overestimated, and the associated risks must be recognised. Central banks are the guardians of price stability. Taking the broad economic situation into consideration, they can promote conditions that are conducive to growth. But central banks are not almighty. Monetary policy does not create wealth in and of itself, only financial and economic actors can harness the very best of their innovative, technological and creative talents to generate value and promote sustainable growth. References Gurria, Angel, OECD Secretary-General. 2012. “Policy priorities for a stronger, cleaner and fairer Swiss economy.” Remarks delivered at the launch of the 2012 OECD Economic Survey of Switzerland. 24 January 2012. International Monetary Fund. 2012.