fritz zurbrugg : comments on financial market developments introductory remarks by mr fritz zurbrugg, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 18 june 2015. * * * accompanying charts can be found on the swiss national bank ’ s website. i will begin with a review of the situation on the financial markets. i will then talk about the implementation of negative interest and its impact on the swiss money and capital markets. situation on financial markets since the beginning of the year, monetary policy has continued to be an important pacesetter on the financial markets. this applies first and foremost to switzerland, where events, especially on the foreign exchange and interest rate markets, were shaped by the discontinuation of the minimum exchange rate and the lowering of the negative interest rate on 15 january. the swiss stock market experienced a price correction, but losses were rapidly recouped. at present, the smi is at roughly the same level as the start of the year. thus swiss shares benefited from a generally favourable mood among investors. since the beginning of 2015, all the major share indices have recorded gains – albeit to varying degrees. on international bond markets, exceptional price movements have been recorded over the past few months, as shown in chart 1. until mid - april, the government bonds of a number of countries with high credit ratings traded at historically low, or even – in some cases – negative yields. with both this development and the introduction of negative interest, yields on confederation bonds declined over the entire spectrum of maturities. however, since midapril, the government bond markets have suffered substantial losses, with yields on ten - year german government bonds, for instance, rising within a very short period from about 0. 1 % to, most recently, 0. 8 %. in switzerland the increase in interest rates was significantly smaller. yields on ten - year bonds are currently around 0. 1 %, compared with – 0. 2 % in mid - april. since the beginning of the year, numerous central banks have adopted more expansionary monetary policy stances. they include, in particular, the european central bank, which in january announced an asset purchase programme in excess of market expectations as regards both the amount and duration. in the us, by contrast, monetary policy continues to point in the opposite direction. thus, most market participants expect that the us federal reserve will initiate a reversal in interest rates before the end

increased. it is even more difficult for them to find yield - bearing investments. i should emphasise, however, that this investment predicament is an international phenomenon and not limited to the swiss franc alone. conclusion i will now come to my concluding remarks. initial experience has shown that the interest rate instrument is also effective in negative territory. as intended, negative interest on sight deposits at the snb was rapidly transmitted to all segments of the money and capital markets. in the current situation, negative interest fulfils a very important monetary policy purpose : to help correct the overvaluation of the swiss franc over time. bis central bankers ’ speeches