Indeed, in terms of financial stability, the development is welcome news as any additional stimulation would only have aggravated imbalances on the mortgage and real estate markets. The third notable aspect relates to developments in the public sector, where the volume of outstanding bonds has fallen over the last ten years. Although the volume issued by the cantons and municipalities increased, that issued by the Confederation declined markedly. While public debt levels rose substantially around the world in the wake of the financial crisis, the Confederation has managed to reduce its debts over this period, thanks to regular budget surpluses. In the context of the Swiss franc bond market as a whole, however, the decline in the volume of outstanding Confederation bonds is comparatively inconsequential. So, in contrast to the domestic segment, which has grown overall, the foreign segment began contracting as far back as 2011. This is principally due to the fact that the financing needs of European banks have tapered off significantly since the financial and debt crisis. In the foreign segment banks are by far the most important issuers of bonds, as can be seen in chart 5; this applies particularly to European banks, which account for 70% of all issues. And in recent years, foreign banks have gradually withdrawn from the Swiss franc capital market. Another possible factor behind the contraction in the foreign segment could be FX swap market distortions.

Seite 7/7  Developments on the Swiss franc capital market and the SNB’s monetary policy Andréa M. Maechler Member of the Governing Board of the Swiss National Bank Money Market Event Geneva, 16 November 2017  Sources: Bloomberg, JP Morgan, SNB  Since start of year, Swiss franc has fallen about 5%, but remains highly valued  1  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Sources: SIX, SNB  Swiss franc bond market has declined slightly despite record-low interest rates in recent years  2  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Sources: SIX, SNB  Growth in Swiss segment is driven by mortgage bond institutions and corporations  3  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Source: SNB  Corporate loans have become less attractive than corporate bonds  4  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Sources: SIX, SNB  Contraction in foreign segment since 2011 due to withdrawal of foreign banks  5  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Sources: Bloomberg, SNB  FX swap market distortions make it more expensive for foreign issuers to raise capital  6  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Low interest rates have made Swiss franc bond market less attractive for foreign investors  73  77  79  21  17  15  11 Source: SNB  72  7  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Source: SNB  Demand for money market debt register claims remains strong despite very negative returns  8  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Sources: Complementa, SNB  Pension funds, a large investor category, are hedging a growing share of their assets  9  16.11.2017 Developments on the Swiss franc capital market and the SNB’s monetary policy | Andréa M. Maechler | © Swiss National Bank  Thank you for your attention.