BIS Review 139/2009  9  (b)  Redesigning the safety net  •  A framework for the banking safety net: Even with systemic risk reduced, the state is unlikely to be able credibly to stand aside when future tail risks eventuate, as they are sure to do. Some bulwark is needed. As in other public policy arena, a predefined and transparent regime can help reinforce the credibility of ex-post actions, serving as a pre-commitment device. At present, only some of the ingredients of such an ex-ante framework exist. Internationally, deposit insurance frameworks tend to be fairly well-defined; liquidity insurance frameworks somewhat less so. Both are much better defined than frameworks for capital insurance. A well-articulated framework for the banking safety net would not only provide greater clarity on each of these pieces. It would also set out interactions and interdependencies between them – when and how the different insurance strands come together to avert crisis. At present, no such ex-ante map exists. Having one in future would not guarantee, but could only increase, the chances of it being adhered to. •  Time-consistent liquidity insurance: Almost all central banks have flexed their liquidity frameworks during the course of this crisis. And rightly so. In many cases, this has meant a combination of longer-maturity lending to a broader range of financial institutions against a wider set of collateral. Pre-crisis liquidity insurance frameworks were shown during crisis to lack time-consistency. How can we best guard against a recurrence? Two elements are key.

Thomas Jordan: Decision-making under uncertainty - the importance of pragmatism, consistency and determination Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Swiss National Bank (SNB)-Federal Reserve Board (FRB)-Bank for International Settlements (BIS) High-Level Conference on "Global Risk, Uncertainty, and Volatility", Zurich, 8 November 2022. *** Ladies and gentlemen It is my pleasure to welcome you to this high-level conference on global risk, uncertainty and volatility. Thank you all for accepting our invitation to join the discussions. I am very pleased to see such a distinguished group of central bank officials and academics. I would like to thank our colleagues at the Bank for International Settlements and the Federal Reserve Board for working together with us in organising this event. The topic of this year's conference is inflation risk and uncertainty. It could not be more timely. This is not to say that uncertainty is a new phenomenon for monetary policy – on the contrary, monetary policy always operates under uncertainty. However, the outbreak of the war in Ukraine has increased uncertainty about further economic developments and inflation to an exceptionally high level. In addition, inflation risks have shifted from being persistently on the downside to the upside. The high level of uncertainty is also reflected in less reliable predictions. Over the past two years, we have had to revise our inflation forecasts continuously and significantly. How do policymakers handle this situation of high uncertainty, upside risks to inflation and limited reliability of forecasts?