was transmitted to the entire spectrum of money and capital market interest rates. however, low or negative interest rates are not limited to switzerland. low interest rates are a global phenomenon and some other countries, especially in the euro area, also have negative rates. switzerland cannot disassociate itself from such developments. with the interest rate reduction in switzerland, the interest rate differential to the major currency areas, which had declined to virtually zero in recent years, has now increased again. clearly, given that the swiss franc is significantly overvalued, the earnings outlook for swiss franc investments compared to those in other currencies is considerably reduced. bis central bankers ’ speeches there is widespread discussion on negative interest rates, in part because institutional investors, and pension funds in particular, could now incur costs for holding liquidity. however, in the current environment, there are no real alternatives to our measure. negative interest helps to reduce the overvaluation of the swiss franc. if the swiss franc were even stronger, this would have a direct or indirect effect on everyone in the economy : companies, households and the public sector. with all the concern about negative interest it is important to remember that when inflation is negative, real interest rates are higher than nominal interest rates. in the past, the inflation rate was often higher than the nominal rate of interest. in other words, in terms of real returns, there have been times when saving was less worthwhile than it is now, indeed, times when savings balances actually lost value in real terms. moreover, in the current situation, efforts to circumvent negative interest rates by obtaining exemptions or shifting to cash are not in switzerland ’ s general interest, since they undermine monetary policy intentions. it should be remembered, in this respect, that holding cash also entails substantial costs and is subject to a high level of risk. we will retain the current interest rate level for the time being. it will continue to support the weakening of the swiss franc. concluding remarks in closing, i would like to return to our decision of 15 january. discontinuing the minimum exchange rate and reducing interest rates further are monetary policy measures for which there are no better alternatives. as i outlined previously, since the introduction of the minimum exchange rate in september 2011, the international currency relationships have changed fundamentally. in view of this development, a minimum exchange rate of chf 1. 20 per euro was no longer sustainable. over the long term,

philipp m hildebrand : do financial markets promote responsible behaviour? speech by dr philipp m hildebrand, member of the governing board of the swiss national bank, at the 35th ics - symposium, university of st gallen, 21 may 2005. * * * i am honoured to join this distinguished panel. in his opening remarks to this year ’ s isc symposium, federal councillor moritz leuenberger compared the symposium ’ s theme – liberty, trust and responsibility – to the holy trinity. let me assure you. i will be less ambitious. in my formal comments, i will take the liberty to reflect not only on financial market but on markets more broadly. the great economist adam smith has famously written that “ it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. ” this often - cited reference from the wealth of nations can be interpreted as suggesting that markets function best when market participants are not concerned about any particular normative values of responsibility but simply pursue their self - interest. led by the “ invisible hand ”, this collective pursuit of self - interest produces the optimal economic outcome. in other words, market participants need not be concerned about responsibility or, to use adam smith ’ s term, benevolence. the “ invisible hand ” of the market will take care of that. it seems to me such a reading of adam smith is too narrow. two sentences prior to the quote about the butcher, the brewer and the baker, smith states : “ in civilised society [ man ] stands at all times in need of the co - operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. ” here, then, is our dilemma : to be civilized and to have functioning markets, we need vast cooperation. yet, human nature is such that it is impossible to base cooperation with millions of unanimous fellow market participants on common values of responsibility or, in adam smith ’ s language, on benevolence. in other words, self - interest and the “ invisible hand ” of the market are not just the optimal but the only available path to cooperation. the story does not end here, however. adam smith clearly recognized the importance of the “ laws of justice ”. by the laws of justice, i take it he meant what we would refer to as the rule of law with a specific focus on property