Balancing Price Stability and Financial Stability: The Role of Macroproductive Tools at the SNB

Monetary policy and financial stability are intrinsically linked, particularly within the context of the Swiss National Bank (SNB). The central mission of the SNB is to maintain price stability, but it also has a mandate to contribute to financial system stability. While price stability takes precedence, this does not preclude the need for macroproductive tools to mitigate emerging risks in the financial sector. In an increasingly interconnected global economy, such tools are crucial for ensuring effective monetary policy transmission and guaranteeing that banks have sufficient capital to manage potential issues. Recent experiences illustrate how, during the Credit Suisse crisis, financial instability directly impacted price stability. Another example was the period of globally low interest rates from 2009 until 2021, where vulnerabilities emerged and were addressed through macroproductive measures. The monetary policy tightening cycle between 2022 and 2023 highlighted that the measures required for monetary policy aligned with those needed to ensure financial stability. This interplay underscores the importance of a resilient financial system and the need for targeted mechanisms to strengthen resilience as risks build up.