Or at least make them more manageable, should one occur again. (In all candor, it would be more historically accurate to say “when one occurs again,” because crises and panics have occurred repeatedly throughout history, including three times just in my own career: the mid-1970s, the late 1980s and just recently). The Federal Reserve’s efforts to revamp the regulatory framework are being led by Governor Tarullo, who is providing focused, important leadership on this critical matter.5 The revamping is largely shaped by the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd–Frank”), which became law last summer. The act establishes a new regulatory infrastructure for promoting financial stability. Among its most prominent macroprudential features is the Financial Stability Oversight Council, an interagency body charged with detecting and deterring threats to the financial system. The act also establishes an Office of Financial Research, a mechanism for the orderly winding down of failing financial firms, and new responsibilities for the Federal Reserve in overseeing certain nonbank financial companies and certain payment, clearing and settlement utilities. The Federal Reserve Board is also directed to develop enhanced prudential standards for large banking organizations and systemically important nonbank financial firms. Dodd–Frank itself mostly provides only high-level direction, leaving an extraordinary number of details and critical decisionmaking to regulatory discretion. As a result, the ultimate nature and future of reform rest in the hands of regulators. As many of you are aware, the various regulatory agencies are presently seeking public comments on a range of issues involving implementation of Dodd–Frank.

The Swiss Market Index (SMI) has gained almost 5% since mid-year, recently surpassing the 2007 peak by over 12% (cf. chart 2). In this environment, interest rates recovered slightly from their lows and yield curves also steepened again. However, yields on government bonds issued by countries considered safe by investors have mostly been below mid-year levels of late; around 28% of government debt  Page 1/6  Berne, 12 December 2019 Andréa M. Maechler  News conference  worldwide is still trading at negative yields. In Switzerland, the yield on 10-year Confederation bonds recently stood at −0.5%, approximately the same level as in mid-2019. Overall, uncertainty dominated the financial markets – a fact that was also reflected in foreign exchange market prices. Weaker economic data weighed particularly heavily on the euro, which has depreciated by some 2.5% in trade-weighted terms since the end of June. On the other hand, currencies considered safe havens by the markets were able to appreciate in this environment. The Japanese yen and the Swiss franc have gained slightly since mid-year; the franc thus remains highly valued. The situation on the foreign exchange markets is still fragile (cf. chart 3). Money market developments  Let me now turn to developments in the Swiss franc money market. Thomas Jordan has already mentioned the adjustments we have made to the way we calculate exemption thresholds for the negative interest rate. These changes came into effect on 1 November.