The Governing Board of the National Bank decides on the medium-term investment strategy for the monetary reserves. Taking into consideration the criteria of security and liquidity, an appropriate risk/return profile is targeted. In addition to the strategic allocation to the individual currencies and investment categories, the Governing Board defines the permissible range for implementation. Department III implements the strategy. Within the defined bandwidths, an internal investment committee decides on positions which deviate from the strategy. In the risk controlling process, compliance with the strategy guidelines and the operative limits as well as the quality of the debtor categories are monitored. Performance is also measured. With the expansion of the investment spectrum to include issuers with lower credit ratings, risk monitoring is gaining in importance. The Governing Board and the Bank Council’s Risk Committee are regularly informed about the results of the risk controlling process. The Bank Council’s Risk Committee assesses risk control and also oversees adherence to the principles of the investment process. 4. Transparency: a further element of good governance  The National Bank has an accountability and information obligation not only to the bank authorities but also to the public. Since the monetary reserves ultimately constitute national assets, this obligation also applies to the investment policy. The accountability obligation includes regular reporting on our investment activities. The National Bank already provides information on the structure of its assets in its Annual Report, including details on currency allocation, holdings of individual investment categories, and on the major risk and return indicators.

The Investment Policy Guidelines of the Swiss National Bank, which have just been published for the first time, contain additional information on the investment and risk control process and on the investment universe. They define the principles of investment policy and the investment categories underlying the strategy, and describe the areas of responsibility. The quantitative information already published in the Annual Report will also be published on a quarterly basis in the future, thus providing the public with even more comprehensive information on our investment activities. 2  BIS Review 39/2004  5. Conclusion  The management of the monetary reserves has gained in importance. The National Bank Act requires the National Bank to manage its monetary reserves professionally, subject to the primacy of monetary policy. After the new Act entered into force, we began to further optimise the investment structure. The increased leeway for investment is used for greater diversification. The structure of the National Bank’s investments is thus becoming more efficient overall, yet without compromising monetary policy requirements in terms of the liquidity and security of these investments. We will also take advantage of the extended legal scope with regard to the free assets, i.e. the proceeds from the sale of gold reserves no longer required. Investment Policy Guidelines of the Swiss National Bank (235 kb)  BIS Review 39/2004  3