andrea m maechler : developments on the financial markets and swiss national bank ’ s experience with negative interest in switzerland introductory remarks by ms andrea m maechler, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 16 june 2016. * * * i will begin with a review of developments on the financial markets, before commenting on our experience of negative interest in switzerland. i shall conclude with some remarks about important innovations affecting financial market infrastructure relevant to the snb. situation on financial markets let me start with developments on the financial markets. risk sentiment deteriorated markedly at the beginning of 2016 due to weak economic data worldwide and a sharp decline in oil prices. volatility increased temporarily during this period, leading to significant losses on the equity markets ( slide 1 ). in mid - february, investors ’ risk appetite returned for a time, thanks to a stabilisation of oil prices and, in particular, improved economic data in the us, china and the euro area. however, by the beginning of june, investor confidence had once again come under pressure due to concerns about a possible exit of the uk from the eu. with the exception of the us and the emerging markets, the major share indices are trading significantly lower than at the beginning of the year. this turbulence caused many market participants to seek refuge in safe investments. yields declined substantially on the major government bond markets. very long - dated bonds were in particularly high demand – a fact which resulted in a flattening of the yield curves. yields on ten - year government bonds in both the us and germany have fallen by around 60 basis points since the beginning of the year, due in part to the monetary policy decisions of the major central banks. for instance, the bank of japan ’ s decision in january to apply negative interest to central bank deposits took markets by surprise. in march, the ecb decided to further expand its asset purchase programme and took its deposit rate deeper into negative territory. in the same month, the us federal reserve signalled that interest rates were likely to rise less quickly than originally anticipated. yields on the ten - year government bonds of some highly rated countries like switzerland and germany touched new lows in june. in switzerland, for example, the yield on ten - year confederation bonds fell to – 0. 5 %. most recently, they have been trading around 40 basis points lower than at the beginning of the year. more than 90 % of outstanding confederation

the system with additional swiss franc liquidity – notably, by selling swiss francs in exchange for other currencies on the foreign exchange market – the banks ’ interest rate burden increases. this makes holding additional swiss franc liquidity even less attractive. innovations affecting financial market infrastructure i now come to my final topic – innovations affecting financial market infrastructure that is relevant to the fulfilment of the snb ’ s mandate. the changes relate to the new trading platform for repo transactions and the next - generation swiss interbank clearing ( sic ) payment system – both key components of switzerland ’ s financial market infrastructure operated by six and its subsidiaries. both switzerland ’ s finance industry and the snb depend on a reliable, secure and efficient financial market infrastructure. it is an important prerequisite for the snb to be able to fulfil its statutory duties – providing the money market with liquidity as well as facilitating and securing cashless payments. new money market platform goes live the new electronic money market trading platform for repo transactions began operating at the end of february and has completely replaced the old system. the new trading platform ’ s name, co : re, is short for “ collateral & repo ”. the technical changeover to the new system went smoothly for all parties involved. the new trading platform gives more than 160 national and international participants a single access point for procuring and investing swiss franc liquidity as well as managing collateral ( i. e. pledged securities ). it also enables the snb to carry out its open market operations on the money market. after more than 15 years of service, the system which co : re has replaced was no longer able to meet the needs and technical requirements of market participants. as you know, the snb is currently implementing its monetary policy using exceptional measures – negative interest on sight deposits and foreign exchange market interventions. in these circumstances, standard money market instruments – repo transactions and snb bills – are not being deployed. it is nonetheless important that counterparties are in a position to carry out these transactions seamlessly. the snb therefore conducts small - volume tests. when a series of tests conducted in autumn 2014 revealed that some market participants were no longer sufficiently familiar with operational implementation, a second round of tests was launched in may 2016. this exercise will be concluded at the end of july. these kinds of test operations, which help ensure counterparties ’ operational readiness, are greatly appreciated by market participants. bis central bankers ’ speeches