a bubble is inflating, so resistance would probably be particularly strong when measures are needed the most. the political and psychological pressure on those pulling on the regulation lever could thus be substantial. important with a good allocation of responsibility i thereby come to an issue that is just as important as how regulations should be designed ; namely, who should pull on the regulation lever and when. lessons can be learned from monetary policy when it comes to responsibility and mandate. if an authority has a sufficient degree of independence it can more easily withstand external pressure. and if it also has clear and specific objectives, it has greater opportunity to do a good job, while at the same time it is easier for society to evaluate it. the allocation of responsibility and mandate are of course important also because there are both an interest rate lever and a regulation lever to pull, and that these can in some cases have similar effects. it is not difficult to imagine situations where regulations and the interest rate counteract one another. for instance, one might have a situation where the prospects for inflation and the economy as a whole look bleak, but where there are nevertheless signs that a credit - driven bubble is inflating. there may then be reason to use macroprudential measures to counteract the bubble. but these will reduce lending and thus further weaken the economy. such counteracting effects need not be a problem, if one single authority is controlling both levers, or if they are controlled by different authorities that are essentially trying to achieve the same aims and make similar assessments. for instance, they may both agree that the economy is weak, but that there may be reason to take action to counteract a bubble. then it is a question of coordinating and trying to find a suitable dosage, or mix, of interest rate and regulations. it is clear that the problems can be aggravated if the levers are controlled by different authorities that do not have the same aims and make completely different assessments of the situation. it is thus important to try to coordinate monetary policy and macroprudential policy. of course, there has always been a need to coordinate monetary policy and the work to promote financial stability. but following the crisis and the emergence of a macroprudential approach, this need has become even more evident. important issues to resolve in the coming years are how responsibility should be allocated between different authorities to facilitate this coordination, and what forms the cooperation should take. it is of central importance that the mandate is clear and the tools are

. speech by fritz zurbrugg, “ challenges posed by the growth in the snb ’ s foreign exchange reserves ”, snb money market event, geneva, 8 november 2012. bis central bankers ’ speeches their unconventional measures for stabilising the economy in the crisis if they had not acquired a high level of credibility in the preceding years. long - term interest rates can only be influenced by a central bank if market participants are convinced that price stability will prevail in the long term. for monetary policy, it remains essential that price stability be ensured, even – and most particularly – in difficult situations like the one we are experiencing at the moment. after the beginning of the financial and economic crisis, the question of what central banks could contribute to financial stability became more important. in the previous years, the view had become established that monetary policy served financial stability best by focusing on price stability. this was linked to the widespread opinion that monetary policy should not “ lean ” against a growing bubble on the equity or real estate markets. it should wait until the bubble had burst before intervening and cleaning up. the “ lean or clean ” question was reassessed as a result of the financial crisis. it became evident that financial stability was not necessarily guaranteed, even where monetary policy – as measured by the criterion of price stability – was very successful. moreover, the damage caused when a bubble bursts can be so enormous that it is not easily remedied using monetary policy instruments. to simplify things somewhat, we can distinguish two ways in which central banks can attempt to make a more substantial contribution to financial stability. the first is to steer monetary policy decisions more strongly in the direction of financial stability. the argument against this is the danger of overburdening monetary policy. one lesson from the years of the great inflation was that the overall result is not improved when monetary policy tries to achieve too many goals simultaneously. the credibility and success of monetary policy will inevitably suffer as a result. for this reason, the second option has much in its favour. this is to supplement the central banks ’ instruments in such a way that – alongside the maintenance of price stability – central banks can also make a greater contribution to financial stability than they have done in the past. the specific tools being referred to here are the macroprudential instruments that have attracted increasing interest in recent years, and that have been introduced in many countries. such instruments can be used in a supplementary manner, as required. in the case of switzerland