but it is not a silver bullet. ultimately, we should leave it to bank boards and management to decide what business model is best for the future. i appreciate that the german legislative proposal on introducing a ring - fence leaves some leeway in that regard. finally, there is evidence that the corporate culture of banks is changing. risk management, for example, has gained a more prominent role in the organisational structure of some banks. efforts to strengthen risk governance have been undertaken as well, but further improvements are necessary. the manipulation of benchmark interest rates by traders is a case in point. withholding or clawing back variable parts of remuneration packages of employees who were involved in such fraudulent activities can only be a first step. in the future, i expect to see further changes in institutions towards the promotion of sounder risk cultures. bis central bankers ’ speeches

, the snb likewise bases its calculations on an interest rate of 5 %. page 9 / 10 varies between banks. however, if this interest rate were to be lowered in the current environment, borrowers, banks and the economy as a whole would face significant risks. it is especially important when assessing affordability and the relevant interest rate to remember that real estate is normally purchased over a long time horizon of several decades. interest payments for a mortgage will thus be incurred for the duration of this period, in the course of which rates may well be significantly higher than they are today. while a sharp interest rate rise is unlikely in the short term, there is considerable room for a substantial upward correction in the medium term. it is worth bearing in mind that long - term interest rates are currently about 300 basis points below what was considered normal during the pre2008 era. it is thus vital that borrowers and banks do not exclude the possibility of a sharp interest rate rise in the medium term and, that they ensure their ability to cope should such a scenario come to pass. in short, they should not assume that today ’ s favourable financial conditions will endure for their entire planning horizon. concluding remarks ladies and gentlemen, let me now wrap up. the negative interest rate charged on banks ’ sight deposits at the snb is indispensable from a monetary policy perspective. given low interest rates around the world and the difficult global economic situation, negative interest – coupled with the snb ’ s willingness to intervene in the foreign exchange market – serves to ease upward pressure on the swiss franc. negative interest helps to maintain price stability and support economic activity in switzerland. of course, the banking sector ultimately benefits if prices are stable and the economy thrives. however, the low interest rate policy is also associated with side - effects. it can have economically undesirable consequences for financial stability. thanks to measures taken to date and the capital surpluses that banks have in place, these risks are currently manageable for the financial system. looking to the future, ongoing low interest rates are likely to continue weighing on banks ’ profitability ; this, in turn, will create an incentive for them to take on more risk. at the same time, imbalances on the swiss real estate and mortgage markets could be exacerbated over time. such developments would render the banking system and the economy more vulnerable. it is thus all the more important that banks put aside sufficient capital surpluses and adopt a conservative minds