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The implementation of SNB monetary policy

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Abstract

We use a regime-switching approach to model the implementation of SNB monetary policy. The regime-switching technique is crucial for assessing the flexibility inherent in the SNB’s monetary policy strategy. The empirical findings support the idea that repo operations are instrumental in smoothing the implementation of monetary policy in normal times, while changes in the official operational target, accompanied by the accommodating use of repo operations, produce the intended effects in periods of distress. Another significant contribution also comes from some new measures designed to improve liquidity in the Swiss franc money market during the financial crisis of 2007–2008.

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Author information

Correspondence to Angelo Ranaldo.

Additional information

The views expressed herein are those of the authors and not necessarily those of the Swiss National Bank (SNB). The SNB does not accept any responsibility for the contents and opinions expressed in this paper.

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Jordan, T., Ranaldo, A. & Söderlind, P. The implementation of SNB monetary policy. Financ Mark Portf Manag 23, 349–359 (2009). https://doi.org/10.1007/s11408-009-0118-x

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Keywords

  • Implementation of monetary policy
  • Libor
  • Repo
  • Swiss franc money market
  • Regime switching model

JEL Classification

  • E5
  • G15