A number of share indices, including the S&P 500 in the US and the SPI in Switzerland, rapidly made good their losses and have in fact attained new highs in the meantime. Important share indices within the euro area, such as the Euro Stoxx 50, have also been able to recoup their losses, and their most recent levels roughly matched those of mid-year. Apart from the continued recovery of the economy in the US and the predominantly sound corporate profits on both sides of the Atlantic, the fact that central banks in the euro area, Japan and China have eased their monetary policies is likely to have played an important role in this regard. Looking at interest rates, yields on government bonds have continued to decline. This is partly a reflection of low inflation and the decline in inflation expectations in the major advanced economies. The fall in yields has been particularly marked in the euro area, where investors are expecting further monetary policy easing measures. Accordingly, yields on tenyear German government bonds have come down by more than 50 basis points since the end of June, while the yields on comparable US government bonds have declined by some 30 basis points. In the same period, yields on ten-year Swiss Confederation bonds have decreased by around 35 basis points, most recently hitting a historical low of about 0.3%. Foreign exchange markets have been significantly affected by the relative strength of economic developments in the US and the correspondingly higher interest rate expectations.

In Switzerland, responsibility for benchmarks lies, in principle, with the private sector and these benchmarks are not regulated. Nevertheless, the SNB is particularly interested that benchmarks for interest rates and exchange rates should be credible, since they are important for well-functioning financial markets and for the implementation of monetary policy. That is why the SNB has supported reform efforts in the area of benchmarks by taking part in various national and international working groups. I have reported here on these efforts on several occasions. The FSB has published two final reports since our last media news conference, so this provides me with a good opportunity to draw some initial conclusions. Benchmarks for interest rates As regards benchmark interest rates, the final report recommends pursuing two main approaches in the future. First, existing interest rate benchmarks should be further improved. Second, efforts should be made to develop alternative benchmark interest rates. Thus the two-pronged approach for the future envisages, alongside improved Libor interest rates which would still be based on unsecured money market transactions, the emergence of more benchmark interest rates related to repo transactions or other near risk-free transactions. The FSB’s final report states that significant progress has already been achieved with the Libor rates. However, not all of the requirements set by the securities regulators (IOSCO standards)1 have so far been met. In particular, it still remains unclear whether the markets upon which the interest rates are based are sufficiently liquid. A certain level of liquidity is needed to ensure robust benchmark rates, i.e.