widely used in cash products ( such as loans, mortgages and capital market instruments ) and investment products. the saron1 an interest rate swap allows a contractually agreed, fixed interest rate ( e. g. for a period of five years ) to be exchanged periodically for a floating interest rate. the floating interest rate portion of the contract is determined by a reference rate. page 2 / 3 berne, 13 june 2019 andrea m. maechler news conference based yield curve will then be able to take over the role of the current, libor - based yield curve. yield curves are important benchmarks for market participants and serve as the basis for pricing medium and long - term financial products. and, finally, the third aspect – how should interest payments be calculated for a period of three months, for example? libor provided a three - month rate which could, among other things, be directly applied to the calculation of interest payments on money market mortgages. if one were to use saron in such cases, interest payments would theoretically have to be made daily, which is impractical. the nwg has recommended using average saron values ( ‘ compounding approach ’ ), and has proposed several possible options. market participants are currently working on implementing this recommendation. let me conclude this section by emphasising that saron is establishing itself as the leading reference rate for financial products. it is the responsibility of market participants to systematically complete the remaining transition work and prepare themselves for the postlibor era. as they do so, they can draw on the recommendations of the nwg, whose activities the snb supports. the faster saron is integrated into financial products, the smoother the replacement of libor will be. the creation of a liquid, saron - based yield curve is fundamental as it will enable our money and capital markets to continue running efficiently. this is very important not only for our country ’ s financial system but also for the transmission of the snb ’ s monetary policy. snb joins network dedicated to ‘ greening the financial system ’ to conclude, i would like to say a few words about our decision to join the central banks and supervisors network for greening the financial system ( ngfs ). as climate change is a global phenomenon, institutional and technical knowledge must be analysed and exchanged globally. the snb joined the ngfs, which now comprises 36 central banks and supervisors, in april 2019. the network provides a forum in which members can conduct

news conference berne, 13 june 2019 andrea m. maechler introductory remarks by andrea m. maechler i would like to start by outlining developments in the financial and foreign exchange markets. i will then make a few comments regarding the snb policy rate and the replacement of libor. finally, i will provide some background information on the snb ’ s recent decision to join the network for greening the financial system. financial and foreign exchange markets in q1 2019, the risk markets – especially the equity markets – recovered from the downturn in q4 2018. this was partly due to the federal reserve signalling its willingness to be ‘ patient ’ on further interest rate hikes, and partly to the fact that economic data for q1 2019 painted a more benign picture than the markets had expected at the end of 2018. in april, equity market indices briefly rose to new highs in several countries. in may and early june, many of these indices declined in response to a weaker economic and inflation outlook and, in particular, the abrupt escalation of the trade dispute between the us and major trading partners like china and mexico. in aggregate, the major equity markets in north america and europe have gained over 5 % since the last news conference in december 2018. by contrast, over the last six months, yields on government bonds have fallen significantly overall in most advanced economies. market developments were shaped by the more pessimistic assessment of the economic outlook and expectations that monetary policy could remain expansionary for longer. at the end of may and beginning of june, deteriorating risk sentiment triggered a flight to safe havens and a corresponding decline in government bond yields. these developments on the equity and bond markets had only a limited effect on the foreign exchange markets. in the major currencies, trading ranges were generally narrow and risk premia low, despite heightened macroeconomic and political risks. swiss franc volatility also remained moderate. the trade - weighted exchange value of the swiss franc has barely changed page 1 / 3 berne, 13 june 2019 andrea m. maechler news conference overall since the last news conference, and the currency remains highly valued. the swiss franc depreciated in april following the postponement of the uk ’ s exit from the eu, however in may, the escalation of the us - china trade dispute and concerns about italy ’ s budget situation reversed this depreciating trajectory. the risk of renewed upward pressure on the swiss fran