solely by our mandate when making our decisions. at the same time, we are continually analysing developments and constantly drawing conclusions with a view to our future actions. based on this, the snb will continue to use the instruments we judge best suited and necessary for fulfilling our mandate in the interests of the country as a whole, to the best of our ability. the snb must be able to continue exercising its independence without this being fundamentally questioned. ladies and gentlemen, i have shown you that the snb ’ s independence is limited to fulfilling the mandate with which it has been entrusted by the politicians, and that it is accountable for this mandate. the snb is not powerful. with the precision of a swiss watchmaker, it has been embedded in our democratic institutions, our constitutional state and the society of our nation. 9 we are aware that a high level of responsibility is attached to our mandate - related independence. that is why we use the independence we have been granted with prudence. one of my predecessors described the snb as, “ to some extent ”, “ the fourth power in the land ”, while adding the comforting comment that “ this additional element within the – generally speaking – highly developed balance of powers in switzerland, has functioned well ” ( lusser, geldpolitik 1996 ). cf. lusser, markus ( 1996 ), geldpolitik, p. 100, zurich : verlag neue zurcher zeitung. bis central bankers ’ speeches

philipp hildebrand : the independence of the swiss national bank speech by mr philipp hildebrand, chairman of the governing board of the swiss national bank, at avenir suisse, zurich, 21 june 2011. * * * the speaker would like to thank peter kuster for his support in preparing this paper. in addition, his thanks go to rita kobel rohr for her helpful comments when drawing up the speech. is the independence of the swiss national bank so extensive that it stands outside the reach of our democratic system based on the separation of state powers, on checks and balances? the topic of central bank independence is a matter of discussion beyond the borders of switzerland. around the world, a debate has started on the limits to power, in general, and the independence of central banks, in particular, and in some cases radical demands have been made. 1 because many central banks found themselves obliged to resort to large - scale unconventional measures during the financial crisis, it is not surprising that the debate is raging now. central banks are indeed very special institutions. they hold the banknote - issuing monopoly and provide the domestic money market with liquidity. consequently, they can never really be short of money. in switzerland, the state has conferred the banknote - issuing monopoly on the snb. this means that it always has the requisite means for meeting its obligations in swiss francs. however, that does not stop it from making losses. as you know, the snb had to report a large annual loss in 2010. this was due to exchange rate losses on the foreign currency holdings. these had increased substantially in the course of our foreign exchange market interventions, which we carried out in order to counter the deflationary threat identified by us. the loss and the increased risk in our central bank balance sheet is a matter which we take very seriously. the annual loss has provoked critical remarks, in particular as regards our independence and our ostensibly far - reaching powers. it is understandable that people will question the extensive measures we had to take to manage the financial crisis. that is all part of life in a democratic society. i am therefore grateful for this opportunity to present to you, in the next few minutes, my thoughts on the essence, the boundaries and the pitfalls of our independence. i hope i will be able to clarify one or two misunderstandings in the process. the reason why the snb is independent is not because it happens to suit the members of the governing board, which is