Together with the SNB’s willingness to intervene on the foreign exchange market as necessary, the negative interest rate policy has prevented further Swiss franc appreciation and has generally helped to reduce pressure on the currency. Third, in an environment of low interest rates worldwide, the negative interest rate is necessary and appropriate for Switzerland. As a small open economy, Switzerland cannot decouple itself from the global low interest rate situation. What would have happened if the SNB had not introduced negative interest? The Swiss franc would have appreciated even more strongly, there would have been a slowdown in growth accompanied by even lower inflation, and unemployment would have risen. Fourth, a phase of low interest rates, especially a prolonged one, can have undesirable sideeffects, including the possibility of cash hoarding, which limits the scope for monetary policy action. There can also be undesirable consequences for financial stability, which should not be  Page 9/16  underestimated. These challenges and side-effects will amplify, the longer interest rates remain low. Fifth, against this backdrop I would like to emphasise that negative interest, or expansionary monetary policy in general, is no panacea. For a sustained economic recovery, adjustments in the real economy are necessary. Structural measures in the major economies can create the conditions for equilibrium interest rates worldwide to rise once more. This would also allow central banks to embark on a gradual process of normalisation, and the potential adverse effects of persistently low interest rates would be contained. Thank you for your attention.

In dealing with global and domestic economic and financial cycle spillovers in the last years of turbulent global environment, central banks have broadened their objectives by including the financial stability goal, as well as many creative innovations in their toolkit. In a low or zero interest rate environment, the monetary authorities across the world turn to the use of unconventional monetary policy measures and obviously now, several years after the outburst of the crisis, it is still an ongoing practice for most central banks. While still examining their usefulness, it is difficult to discuss their exit dynamics, even in the case of the FED, although its monetary policy normalization started at the end of the last year. Anyway, it is still debated whether the unconventional instruments and tools created during the crisis will become an integral part of the conventional monetary policy framework. Probably this will depend on country specific circumstances and individual contribution of these newly created instruments and measures in fulfilling policy objectives on price and financial stability. Macroprudential tools have also been widely used for dealing with specific features of the financial cycles in the last period, aiming to boost financial soundness or provide positive feedback to the economic recovery that has certainly expanded the horizon of their expected impacts compared to the past. Policy measures aimed to support lending, especially in the economies with strong negative loop between private sector leverage and banks’ credit risk, will probably stay effective for a reasonable time span.