Fritz Zurbrügg Vice Chairman of the Governing Board Swiss National Bank Volkswirtschaftliche Gesellschaft des Kantons Bern Berne, 24 November 2016  Slide 1  2  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 2  3  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 3  Introduction of negative interest  4  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 4  COMPOSITION OF BANKS' INTEREST RATE MARGIN (STYLISED)  Mortgage rate (10-year) Asset margin  Interest rate margin  Structural margin  Capital market rate (10-year) Capital market rate (3-year)  Liability margin Interest rate on deposits  5  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 5  Introduction of negative interest  6  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 6  CONTRIBUTIONS BY BUSINESS AREAS TO NET EARNINGS 2015  Swiss banks  Swiss domestically focused banks  European banks  Interest business  37%  58%  67%  Commission business  35%  27%  19%  Trading business  13%  9%  9%  Other  14%  6%  5%  7  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 7  Introduction of negative interest  8  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 8  Introduction of negative interest  9  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Slide 9  Introduction of negative interest  10  24/11/2016 Volkswirtschaftliche Gesellschaft des Kantons Bern | Fritz Zurbrügg | © Swiss National Bank  Thank you for your attention.

The last year has been characterised by large moves in exchange rates and falls in risky asset prices but the repricing of government bonds and of expectations for monetary policy have been particularly striking. Significant UK specific factors emerged in September and October, which have been covered in detail elsewhere12. The UK policy premia which opened up have now disappeared. The cumulative increase in yields on UK 10 gilts over the last year is now very closely in line with the change in US and German 10 year bonds (Chart 7). Having peaked at 4.6% in late September yields on 10 year gilts were back down at 3.2% at close yesterday, their level at the start of September. Source: Bloomberg L.P., and Bank calculations Notes: The path for Bank Rate implied by forward market interest rates are based on overnight index swap rates. Latest yield curve refers to forward market interest rates at cob 21 November 2021. UK fiscal policy developments in response to the energy price shock have been a key contributor to the outlook for inflation. In early September the Government announced an Energy Price Guarantee (EPG) for households (and a business equivalent) to cap average energy bills at £ up until April 2023. In the Autumn Statement on 17 November, the Government announced an increase in the cap to £ for the year to April 2024.