to combat major economic disruptions rapidly and effectively, as shown so impressively in the crisis. new monetary policy instruments merely serve to fulfil our mandate in a transformed environment. what also appears important to me is that central banks do not take on tasks that they cannot tackle with their existing instruments, thereby awakening false expectations and hopes. to ensure that monetary policy remains effective, it is important that central banks do not depart from their mandate of price stability. if expectations are too high, central banks are bound to disappoint them in the long run. this will cause them to lose credibility in their core bis central bankers ’ speeches area, and this could lead to politicians becoming involved. in this situation, central banks ’ independence would be at stake. caution is to be recommended with respect to monetary policy trends. certainly, the snb will not simply go with the general flow, but will instead pursue its own path tailored to the needs of our country. extended role and new financial stability approach i will now say a few words about financial stability. financial stability means that financial system participants are able to carry out their functions and are resilient to disruptions. it is an important prerequisite for economic development and effective monetary policy implementation. consequently, it is clear – and well - established historically – that central banks make an important contribution to financial stability. in fact, several central banks were founded specifically for this purpose. the idea was that the central bank should serve as the lender of last resort, thereby protecting the banking system from collapse. in switzerland, the snb has always been the lender of last resort. in the revision of the nba carried out ten years ago, the snb received for the first time an explicit mandate to contribute to financial stability. the term “ contribute ” expresses the fact that other state institutions also have an influence on financial stability and that, in addition, this stability can never be absolutely guaranteed. until recently, the snb had two options for its contribution to financial stability, in addition to the monetary policy toolkit, which was mainly based on interest rates. the first was to rely on the persuasive power of its sound arguments and hope that banks and other financial market participants would draw the right conclusions from these, so that a crisis did not arise. the most important example for a persuasive approach is our annual financial stability report. since 2003, this report has conducted an assessment of the stability of the banking industry, highlighted tensions and

##r and in our economic progress report speeches. in the mpr, we now provide details on the most important risks to our projections. we spell out how we have seen these risks evolving and what we will watch so that we can judge their continuing evolution. of course, there will always be a desire for the bank to be more forthcoming about our own interest rate expectations, including by publishing a projected interest rate path. ironically, the case for doing so is usually based on economic models that are so simple they exclude most financial markets. this means that they cannot even consider the idea that forward guidance might suppress the signalling role of financial markets, which we consider of high value. 5 / 6 bis central bankers'speeches given the complex uncertainties we face today, market signals have never been more valuable to policy - makers. to continue to benefit from those signals, we must be honest and transparent about what we know and what we do not know. we are committed to explaining what issues we are looking at and how we are thinking about them. today, as we approach our next interest rate decision, we are working to incorporate in our projections the effects of the recently announced us steel and aluminum tariffs, along with retaliatory measures, both in canada and globally. we are also analyzing individual - level data to understand how the new lending guidelines in canada are affecting the housing market and mortgage renewals. we expect these issues to figure prominently in our upcoming deliberations. conclusion it is time for me to conclude. i hope that my talk about transparency has clarified our work at the bank. we realize the importance of transparency, along with accountability and credibility, in building understanding and trust among all our audiences. we have worked hard at being transparent, and these efforts have been recognized as world - leading among central banks. but we acknowledge that we have more work to do. we can be clearer in our communications with the general public. and we will be as clear as we can be with financial markets, always guided by what we know and by what we do not know. my bottom line is this : being transparent is not only the right way to operate in a modern democracy, it also helps us meet our inflation - control target and our commitment to a stronger, more resilient canadian economy. i would like to thank toni gravelle for his help in preparing this speech. 6 / 6 bis central bankers'speeches