Thomas Jordan: Protectionism complicates monetary policy

Speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, to the Volkswirtschaftliche Gesellschaft des Kantons Bern, Berne, 31 October 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and Gentlemen

Switzerland owes much of the prosperity it enjoys today to open markets and thriving trade with many countries across the globe. In recent decades, free trade in goods and services, coupled with advancing technological progress, has delivered growth and prosperity, not just in Switzerland but in many other parts of the world, too.

Recognising the advantages of international trade, most countries remained true to the principles of free trade even amid the outbreak of the financial crisis almost exactly ten years ago. They resisted the temptation of knee-jerk isolationist responses and refrained from sweeping protectionist measures. The onus was on not repeating the mistakes made in the Great Depression of the 1930s, when such interventions served only to accelerate the economic decline rather than bringing the hoped-for respite. As we now know, and as Chart 1 clearly shows, the consequences were disastrous. Recovery from the Great Depression was painfully slow, whereas world trade returned relatively quickly to its previous levels following the most recent crisis.