or disorderly in financial markets. and whether if asset markets were disorderly, that would feed back into the financial system in ways that both seriously amplified the adjustment and created serious threats to systemic stability. i fear that the answers are unknowable. but the task for central banks is nevertheless clear enough. working with our partners in regulatory organisations and in other central banks, we must seek to understand today ’ s global banking system and capital markets well enough to tell the difference, if and when called upon to do so, between a problem requiring solely a macroeconomic policy response and a more complex financial stability problem. and, most important of all, central banks must strive to maintain the medium - term credibility of monetary policy, as an essential pre - condition for the stability in which both the real and financial economy can thrive. not pretending that the world is simpler or safer than the reality is one small part of that endeavour. see, for example, the us brady report, and the report of the hong kong securities review committee, 1987. table 1 : macroeconomic and asset price annual volatility uk gdp us gdp 1951 - 59 1960 - 69 1970 - 79 1980 - 91 1992 - 2005 1. 5 1. 6 2. 2 2. 3 0. 9 3. 3 uk inflation percentage change between 60 - 69 and 92 - 05 - 41. 8 percentage change between 80 - 91 and 92 - 05 - 59 1. 7 2. 5 2. 5 1. 1 - 36. 4 - 56 1. 5 5. 5 3. 4 1. 0 - 34 - 72 us inflation 1. 8 1. 2 2. 0 2. 3 0. 5 - 55 - 76 s & p 500 14. 0 15. 7 19. 1 12. 0 15. 2 - 3 20. 4 43. 3 12. 1 15. 2 - 25 5. 4 7. 8 15. 4 9. 6 - 38 3. 1 11. 2 7. 7 4. 9 - 36 £ eri 6. 9 4. 5 2. 3 - 49 $ eri 5. 4 4. 4 2. 9 - 34 yen eri 9. 9 4. 3 4. 0 - 8 € eri 1. 8 3. 0 3. 0 - 3 ftse all share ( 2 ) 10 - year ust 3. 4 10 - year uk gilt ( 2 ) notes : 1. uk inflation is consumption deflator inflation ; 1960 - 69 includes

philipp hildebrand : financial stability summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the institut des hautes etudes commerciales de lausanne, lausanne, 16 september 2008. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * during the period of financial market turbulence, central banks have gone far with their interventions to stabilize the financial system, taking into account the high costs that can be imposed by a banking crisis onto the real economy. central banks by themselves, however, cannot guarantee financial stability in the long term. in particular, we cannot exclude that their interventions create incentives for banks to be less cautious in the future. the first line of defence therefore consists of banks having sound risk management practices and holding appropriate levels of capital and liquidity. the financial stability forum has made a series of recommendations in this respect. given the size of the big swiss banks in relation to our national economy, we should be especially prudent. for this reason, the swiss national bank supports the project undertaken by the swiss federal banking commission ( sfbc ) to strengthen capital adequacy requirements and to revise the liquidity requirements for the big banks. as the sfbc has pointed out on several occasions, these measures have to be implemented gradually – to ensure that banks have sufficient time to adapt. these measures will contribute to the solidity and credibility of the swiss financial centre. this will strengthen its position as a global leader in wealth management.