Speech  Embargo 24 November 2016, 6.15 pm  Negative interest rates: necessary from a monetary policy perspective – but with what risks for the banks? Volkswirtschaftliche Gesellschaft des Kantons Bern  Fritz Zurbrügg Vice Chairman of the Governing Board * Swiss National Bank Berne, 24 November 2016 © Swiss National Bank, Berne, 2016 (speech given in German)  *  The speaker would like to thank Till Ebner and Adriel Jost for their support in drafting this speech. He also extends his thanks to Stefanie Behncke, Toni Beutler, Robert Bichsel, Rita Fleer, Pius Matter and Oleg Reichmann for their valuable comments and to the SNB Language Services for their assistance. Page 1/10  Ladies and gentlemen Thank you for inviting me to speak at your annual general meeting. It has become something of a tradition for members of the Governing Board of the Swiss National Bank to appear before your society, the Volkswirtschaftliche Gesellschaft des Kantons Bern, and I am honoured to continue this tradition. In November 2012, my colleague Thomas Jordan began his speech by citing a few figures to underline just how much the world had changed since the financial crisis. The Swiss franc exchange rate to the euro had fallen from 1.65 to 1.20, shortterm interest rates had decreased from 2.5% to almost zero, and the yield on ten-year Confederation bonds was just 0.5%.

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.