My focus is mainly on the residential property segment, since this is where we have identified the most serious risks in the current situation. 9  Cf. the associated recommendations of the IMF in connection with its comprehensive review of the Swiss financial system in 2019: www.imf.org/en/Publications/CR/Issues/2019/06/26/Switzerland-Financial-Sector-Assessment-Program-47045 consulted on 30 August 2021). Page 7/12  Strong growth and increasing affordability risks in mortgage lending  Various mortgage market indicators show that, in recent years, mortgage volume has grown more strongly than can be explained by fundamental factors. For example, aggregate mortgage debt, as measured by the ratio of outstanding mortgage loans to GDP, has risen sharply since 2009 (cf. slide 2). The increase was particularly marked last year due to the strong decline in GDP in connection with the coronavirus crisis. We expect the ratio to decrease again somewhat as the economy recovers. Nevertheless, the current ratio of around 150% in Switzerland is high not only by international comparison, but also by our country’s own historical standards. Over the past years, however, the SNB has focused less on the increase in the volume of mortgage loans than on their quality. The main focus in this context has been on affordability risk, i.e. the risk that borrowers cannot afford their mortgage costs in the long term. The following calculation represents a standard metric used by banks to assess the affordability of a mortgage loan: Affordability is deemed to be appropriate if the imputed costs of an owner-occupied residential property – i.e.

Macroprudential instruments  I would now like to turn to our options for countering potentially damaging developments on the mortgage and real estate markets and for strengthening the resilience of the banking system. What options does the SNB have? In specific terms, our macroprudential instruments comprise communication, participation in national and international regulatory work, and the authority to propose the activation, adjustment or deactivation of the countercyclical capital buffer (CCyB). Communication has a significant role to play when it comes to counteracting market participants’ tendencies to underestimate systemic risks and thus to take excessive risks themselves. After all, it is often hard for individual market participants to assess systemic risks. It takes an aggregated view to be able to identify unsustainable developments. As the country’s central bank, we adopt such an aggregated view. This is why the Financial Stability Report, the key element in our macroprudential communication, plays an important role. In this report, published once a year, we provide a detailed assessment of the stability of the Swiss banking sector as a whole and also comment on current regulatory proposals. As important as communication is, it is generally not enough on its own to contain stability risks. A regulatory framework is also required. The SNB participates at various levels in the design of this framework, both at national and international level. At national level, the SNB cooperates with the federal government and with FINMA in securing appropriate regulatory framework conditions.