andrea maechler will discuss interest rate developments in more detail later. after the discontinuation of the minimum exchange rate, the swiss franc appreciated significantly in trade - weighted terms. this was partly due to the fact that the euro had reached a low point in early 2015 in the context of the greek crisis. our expansionary monetary policy has since helped to weaken the swiss franc. since january 2015, the franc has offset about half of the effective appreciation. it nevertheless remains significantly overvalued. monetary policy outlook ladies and gentlemen, let me summarise my main points. our monetary policy is based on two key elements – the negative interest rate and our willingness to intervene in the foreign exchange market. unlike during the period when the minimum exchange rate was in force, we now decide on a case - by - case basis when – and on what scale – we will intervene. our monetary policy aims to have a stabilising effect on the price level and to support the economy. the negative interest rate and our willingness to intervene make the swiss franc less attractive and thereby help to achieve these goals. the persistently low interest rate environment presents a challenge for savers and investors. however, it is important to emphasise that negative interest is an absolutely essential instrument at this point in time. in the current climate, higher interest rates in switzerland would cause monetary conditions to deteriorate. if the snb were to aim for higher interest rates, investments in swiss francs would be far more attractive than investments in other currencies. a substantial appreciation of the franc – and its consequent effects on the swiss economy – would be virtually unavoidable in these circumstances. such a scenario would be beneficial neither for savers nor investors. as a small open economy, switzerland is highly exposed to developments abroad. next week ’ s uk referendum on whether to remain in the eu may cause uncertainty and turbulence to increase. we will be monitoring the situation closely and will take measures if required. our national bank i would like to close with a few words about something completely different, a new online information platform for the general public called “ our national bank ”. this has been available for a few days now at our. snb. ch, and provides basic information on the snb and money, price stability, and monetary policy. additional focus topics featured on “ our national bank ” include the minimum exchange rate and the real estate market. the complex subject of monetary policy is explained

on switzerland. should there be a need for action, the snb will take the necessary measures. the export - weighted real external value of the swiss franc remains well above its long - term average. since the introduction of the minimum exchange rate, it has changed only slightly. thus, the swiss franc is still high. the slight inflation differential during the past quarters meant that the real adjustment of the swiss franc against the euro has come to a virtual standstill. in this environment, the minimum exchange rate remains essential for guaranteeing appropriate monetary conditions. snb monetary policy to conclude, i would like to mention a number of challenges which the snb will be facing in the near future. overall, the environment remains extremely challenging for both the swiss economy and our monetary policy. with its high level of international integration, switzerland is strongly affected by global developments, especially those in neighbouring countries. the ecb ’ s measures to support economic development in the euro area are also likely to have a favourable impact on the swiss economy in the medium term. nevertheless, given the low interest rates in europe and the rest of the world as well as the strong swiss franc, the snb ’ s monetary policy environment will remain highly complex. we will continue to take all action necessary to fulfil our mandate of ensuring price stability, while taking due account of economic developments. the financial crisis has shown that balanced economic developments require more than just price stability ; financial stability is also of key importance. the snb ’ s annual financial stability report is a contribution towards this. in the report, we draw attention to developments which might present a risk for financial stability. in this respect, we are still concerned about imbalances on the mortgage and real estate markets. the financial crisis showed what serious effects the problems in the financial sector can have on the overall economy. it is precisely in the current environment of globally low interest rates that the danger of imbalances on the financial markets is particularly high. with our report, we would like to urge participants in these markets to exercise caution. in addition, recent developments in the area of legal risks demonstrate once again the importance of strongly capitalised swiss banks. my colleague, jean - pierre danthine, will now present the most important conclusions from our financial stability report. ladies and gentlemen, thank you for your attention. it is now my pleasure to give the floor to jean - pierre danthine. bis central bankers ’ speeches