term swiss franc money market rates – particularly the most representative money market rate, saron – settle close to the now - positive level of the snb policy rate. the announcement of a policy rate change does not, in and of itself, always cause money market rates to rise, especially in an environment of abundant reserves. for money market rates to rise as envisaged, monetary policy must be implemented in a manner that ensures swiss franc money market rates move close to the snb policy rate. what does it take to achieve this? in terms of our chart on slide 4, what does it take for the blue arrow to materialise? the transition to a positive rate environment did not change the objective we pursue when implementing our monetary policy. our objective, stated on the left - hand side of slide 5, remains to keep secured short - term swiss franc money market rates close to the snb policy rate. however, for reasons we will explain shortly, the snb had to adjust the approach it uses to implementing its monetary policy. specifically, as shown on the right - hand side of slide 5, two new elements were needed : reserve tiering and reserve absorption. before we dive into the details of what reserve tiering and reserve absorption accomplish, you may be wondering why we did not revert to the implementation approach we used to employ before the global financial crisis, or gfc. back then, we controlled money market rates in positive territory by keeping the supply of reserves limited and close to the banks ’ structural demand for reserves. 3 in the aftermath of the gfc, conditions in the money market changed since june 2019, the snb has communicated its interest rate decision using the snb policy rate. in setting the snb policy rate, the snb signals the desired level of interest rates in the secured money market. for the approximately 20 - year period prior to june 2019, the snb set a target range for the three - month libor in its monetary policy assessment, and it then usually sought to keep this interest rate in the middle of the target range through money market operations. at that time, the structural demand was mainly driven by the minimum reserve requirement that banks have to fulfil as well as by banks ’ desire to hold sufficient reserves to be able to make all required payments. page 3 / 10 fundamentally and permanently. the following two structural changes, in particular, drove our decision to adopt the new approach to implementing monetary policy. 4 first, since the

in times of financial distress the role of the official sector remains crucial in providing financial assistance to emerging market economies. it is true that informal arrangements are in force in order to facilitate negotiations with the main creditors of the private sector. the so - called “ london club ” has become a kind of permanent institution, like the paris club for obligations vis - a - vis official creditors. however, the development of new instruments for lending to emerging market economies and the increasing diversification of the creditor base, while facilitating the financing of the countries concerned, render negotiations between debtor countries and their private sector creditors more difficult in the event of a crisis. this explains why, so far, only ad hoc measures have been developed in order to involve private sector creditors - on a case - by - case basis - in the resolution of financial crises. in addition to enhanced efforts to improve the communication channels between debtor countries and their creditors, which would also enhance crisis prevention, the ecb would support a move to strengthen the existing framework for the management of financial crises. three fundamental principles may be helpful to this aim. first, the framework should rely more on rules and less on discretion than was the case in the second half of the 1990s. a case - by - case approach, lacking clear “ rules of the game ” on the respective roles of private and official sectors in times of distress, runs the risk of creating the perception that official resources would provide a “ safety net ” if need be. such a perception is likely to distort debt management on the borrowers ’ side and risk assessment on the creditors ’ side, thus engendering problems of moral hazard on both sides. second, the imf cannot - owing to its limited resources which do not match private capital outflows - and should not - owing to moral hazard problems mentioned above - act as an international lender of last resort. imf financial assistance can neither be unlimited nor cover all the financing needs of a country. the imf should rather play a catalytic role. imf conditionality in the form of adjustment programmes should, in conjunction with imf financing, be instrumental in improving the external position of member countries and quickly restoring market confidence. actual ceilings on access to imf financing facilities should also be established. third, as a logical consequence of limited official financing, the private sector should be involved in the resolution of financial crises. it is a matter of fact that a country running into financial difficulties will need to involve its creditors in one