speech embargo 26 april 2019, 10. 00 am monetary policy in the interests of the country as a whole 111th ordinary general meeting of shareholders of the swiss national bank thomas j. jordan chairman of the governing board swiss national bank berne, 26 april 2019 © swiss national bank ( speech given in german ) page 1 / 8 mr president of the bank council dear shareholders dear guests a warm welcome to you all to our annual general meeting. engaging with the general public across switzerland is very important for us. it therefore gives me great pleasure to speak before you here today, and i hope i will have the opportunity to talk with as many of our shareholders as possible over refreshments afterwards. in my position as chairman of the swiss national bank ’ s governing board, i receive a lot of correspondence from people throughout our country. in one such letter, the owner of a family business in northwestern switzerland described how she had struggled for years to hold on to customers, only to have to now close down anyway as the strength of the franc has made competition from neighbouring countries simply too great. in another letter someone wrote that despite his having had to pay ever higher pension fund contributions over the past 15 years, there has been no increase in his projected retirement savings. in fact, they have even declined. he attributes this to what he refers to as ‘ minus interest ’. ladies and gentlemen, letters such as these give us a picture of the key issues of the day for people in switzerland, and how their lives are affected by specific economic circumstances. we always find this informative. however, the snb ’ s monetary policy can never be focused solely on individual needs and concerns. instead it must serve the interests of the country as a whole. and unfortunately, you can ’ t have your cake and eat it, as the saying goes. or in the case of the two letters i quoted, you can ’ t have higher interest rates and a weaker swiss franc at the same time. the snb bases its monetary policy on careful consideration of its impact on the overall economy. for some four years now, we have centred on two key elements : the negative interest rate and our willingness to intervene in the foreign exchange market as necessary. the first of these in particular is a very unusual concept for many of our fellow citizens, and this is also reflected in the correspondence we receive. some say that it runs contrary to economic logic, and creates major problems for savers and pension funds. against the current

, researchers in this area were able to identify key frictions that make exchange and payment far from trivial. this is not just a theoretical issue that is only relevant to economists in ivory towers. payments and the exchange process are multibillion - dollar businesses and private sector firms are constantly innovating in this area to overcome the types of frictions that are well - known to this group. the knowledge that i have gained from interacting with 1 / 3 bis - central bankers'speeches researchers in this area for the last 20 years has aided me in one of my roles as a federal reserve governor, supporting the fed's oversight of the u. s. payment system. it also guides my thinking about how to make global payments cheaper and faster, which is a key objective adopted by the g20 countries in 2020 and is one fully supported by the federal reserve. keeping with the tradition of studying exchange and payment, several papers to be presented this year focus on how frictions in financial markets, such as asymmetric information or asset illiquidity, matter for the transmission and implementation of monetary policy as well as unemployment and inflation. similarly, it is great to continue seeing work studying frictional intermediation in asset markets and the implications for asset prices and the efficient sharing of risk. these contributions push the frontier of our knowledge, facilitate our understanding of real - world complexities, and inform policy thinking. the workshop's focus on broader financial stability issues is also very important. financial stability vulnerabilities, such as run risk, excessive leverage, and bubbly valuations, could amplify the effect of adverse shocks, potentially resulting in big economic losses and a slowdown in economic activity. understanding the mechanisms that allow these vulnerabilities to grow and transmit stress to the rest of the financial system requires rigorous theoretical research and solid micro - foundations. over the course of this week, we will hear interesting work on this topic that includes research questions such as how a central bank can balance interventions for financial stability and interventions to achieve a certain stance of monetary policy, how banks take risks, and understanding the risk of runs on banks, non - banks, and stablecoins. other concepts are newer and more novel. as the monetary and financial ecosystem has evolved, so has this workshop, bringing together many perspectives and modeling approaches to money and banking theory and its applications. one recurring theme has been to pay special attention to micro - foundations and institutional details, which is important to rigorously