jean - pierre danthine : swiss monetary policy in the public eye speech by mr jean - pierre danthine, member of the governing board of the swiss national bank, at the money market event, zurich, 24 march 2011. * * * i would like to thank marlene amstad and gero jung for their valuable support in drafting this speech. i also want to thank rita kobel rohr for helpful comments. introduction : the great recession vs the great depression the great recession is behind us. in the case of switzerland, we may wonder if the term is justified. with a fall in output of 3. 2 % from the top of the cycle in 2008 to the trough in 2009, the recession was the most severe since the mid - 1970s. 1 however, measured on a quarterly basis, consumption, which is a more meaningful indicator of economic well - being, barely fell. in switzerland, the great recession was a ( relatively severe ) recession. what was it, that transformed what many feared could have been a new great depression into the great recession? as historical data show, the downturn in global industrial output in the first ten to twelve months of the two crises was similar ( chart 1 ). economic historians will be occupied with this question for a long time. let me venture to say that the policy reactions of fiscal and monetary authorities will occupy a central position in the historians ’ final answer. charts 2 and 3 provide some illustrations of the difference in policy responses between 1929 and 2008. the much stronger monetary policy reaction, a greater willingness to run fiscal deficits and incomparably larger amounts of support to the financial sector are the distinctive features of the present crisis. monetary and fiscal policy were both restrictive in the great depression. the opposite is the case in the great recession ; both have been and continue to be very expansive. stabilisation packages to help the banking sector have been very large, while they were non - existent in the early thirties. it will be hard to argue that these policy responses have not played a crucial role in avoiding a repetition of the great depression. of course, expansive fiscal policies, support measures to the financial sector and unconventional monetary policies do not come for free. this can be seen in the increase in public debt levels registered in many countries and in the size of, and the corresponding risks present in, many central banks ’ balance sheets. what in turn are the reasons why, in switzerland, the great recession took the form of a “ relatively severe recession

mr bergo focuses on norges bank ’ s responsibility for promoting an efficient payment system address by mr jarle bergo, deputy governor of norges bank, to the banks ’ payment systems conference, held in oslo on 11 november 1999. * 1. * * background risk in the payment system is closely linked to the use of deposits. payment transactions - via banks take time, and this time - lag ( between payment and settlement ) is an important source of settlement risk. cash payment allows immediate settlement without any such risk. therefore, the transition from cash settlement to the use of deposits involves greater risk, but also greater efficiency. thus, the public ’ s choice of means of payment and payment instruments directly affects the degree of risk and efficiency in the payment system. the public ’ s choice of different means of payment and payment instruments varies over time. this is, of course, nothing new. already in 1924, the banking commission - which drafted a new law on commercial banks at the time - stated the following : the concept of means of payment is not beyond change ; it has taken different forms throughout time. the law states what should be considered legal tender..., but common practice also allows certain secure assets to be used as payment... these bank - issued means of payment have - in the more developed countries - reduced the use of legal tender to minor daily disbursements ( cash payments in its narrowest sense ). today, the payment system continues to undergo rapid change. new technology, new participants, new regulations and more globalisation have made this fairly complicated subject matter even more challenging to keep up with. norges bank has a statutory responsibility for promoting an efficient payment system. this responsibility becomes even more demanding when the systems change rapidly. the focus of my address here today will be on norges bank ’ s responsibility as distinct from the responsibility of the market participants and, in particular, that of the banks. however, before i embark upon this i will provide an assessment of risk and efficiency in the norwegian payment system. i would like to begin with four observations on risk and efficiency in the payment system : 2. observations first, payment system risk is closely linked to the organisation of payment services ( legal agreements, time of payment, etc. ) central banks have been particularly concerned with risk in large value transfer systems, or systems for clearing and settlement of payments between banks. these systems are located at the top of the so - called payment pyramid. chart 1 : the