If we are to fulfil our legal mandate to ensure price stability while taking due account of the development of the economy, we have to implement expansionary measures in such circumstances, in order to counter the strong franc. In the current environment of very low interest rates worldwide, it is not possible to steer monetary conditions exclusively via the interest rate channel. In addition to the negative interest rate (–0.75%), the SNB influences monetary conditions by intervening directly on the foreign exchange market as necessary. The goal of this policy is to reduce pressure on the currency and to make Swiss franc investments less attractive. Our foreign exchange market interventions do not amount to a mercantilist policy at the expense of Switzerland’s trading partners or a beggar-thy-neighbour strategy; rather, this policy provides the SNB with a necessary instrument for ensuring price stability and for fulfilling its mandate. What would happen if we were to interpret the current account surplus as an indicator of the Swiss franc tending to be too weak, or of the economy growing strongly, without taking these particularly Swiss circumstances into account? We would misjudge the risks to price stability and economic development, with which we have repeatedly been confronted in the recent past. And we would not make any appreciable reduction to the current account surplus, even if the franc were stronger. Allow me to illustrate this point with a simple chart.

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