Together they hold a total of over $ trillion of foreign reserves, which have doubled over the short period of only three years. The sheer size of these foreign reserves and the business opportunities they make available have greatly enhanced the level of sophistication in their management. Increasingly, such management is making use of advanced financial instruments and expert services offered by international investment banks, and is much more alert to shifts in short-term trends in currencies as well as in interest rates. Private-sector savings in Asia are also very substantial, given the high savings rate, which is generally in double digits and, for some, as high as 30% to 40%. Although the management of private sector savings in Asia is generally a lot less sophisticated by comparison, it is being increasingly institutionalised, along with the introduction of provident funds, and is managed by professionals, becoming increasingly active in the international markets. Over half of the new issues of US Treasury securities are now taken up by Asian economies. And Asia is now a large net exporter of portfolio  1  June 2004 figures. BIS Review 66/2004  1  capital. For nine emerging Asian economies (excluding Japan), the amount was a net $ billion in 2003. The second characteristic of Asian finance is, by contrast, the lack of sophistication in domestic financial intermediation. The effective channelling of savings into investments is crucial for the promotion of economic growth and development. This is something that developed markets with advanced financial systems take for granted.

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.