up around a quarter of the consumer basket, the effect of this channel is substantial. second, the exchange rate affects inflation indirectly via the business cycle. a weaker swiss franc boosts economic activity. this tends to increase inflation. a stronger swiss franc slows the economy. this tends to dampen inflation. for switzerland this mechanism is important : foreign trade accounts for a large part of our gross domestic product. switzerland earns every second swiss franc abroad. for good reason, the export sector is said to be the engine of the swiss economy. because the exchange rate affects inflation and the economy, it plays a key role for our monetary policy. to maintain price stability, we influence monetary conditions. they are determined by interest rates and the exchange rate. to maintain appropriate monetary conditions, we set the snb policy rate. we can also influence monetary conditions through further monetary policy measures, for example foreign exchange interventions. since 2022, page 2 / 8 we have explicitly mentioned these additional measures in our monetary policy strategy. this reflects their increased importance in recent years. 1 the snb policy rate remains at the core of our monetary policy implementation. it directly influences interest rates in general and – indirectly – the exchange rate. if necessary, we intervene in the foreign exchange market. this influences the exchange rate directly. the exchange rate has played a key role for the swiss economy and our monetary policy for decades. however, we started to intervene in the foreign exchange market on a large scale only during the global financial crisis. 2 as it happens, we began doing so almost exactly fifteen years ago, on 12 march 2009. what was the reasoning behind this monetary policy decision to intervene in the foreign exchange market? fifteen years of foreign exchange interventions – an overview march 2009 : the start of foreign exchange interventions at that time, we were in the middle of the global financial crisis. only six months before, lehman brothers had failed. equity markets collapsed, the world economy crashed and inflation dropped. central banks around the world quickly lowered policy rates and increased liquidity. in many countries, policy rates reached zero. this was then considered to be the lower limit : the zero lower bound. the international financial turmoil also spread to the swiss financial market. declining global demand hit the swiss economy. investors fled into the safe haven of the swiss franc. our currency came under strong appreciation pressure and volatility increased markedly ( slide 3 ). the inflation outlook worsened, and the risk of deflation became acute. the s

. the snb ’ s foreign exchange reserves, however, do not represent profit. they are an asset item on our balance sheet and are offset by the increased money supply as a liability item. if we were to make an unrequited transfer of our foreign currency to a sovereign wealth fund, our equity would reduce or even become negative. the sovereign wealth fund or the confederation would therefore have to buy the foreign currency from us. but where the money would come from for this is not clear. in principle, the confederation could borrow from the capital markets, though this is unlikely to be feasible due to the debt brake. or, we could grant the confederation a loan, but this would be equivalent to state financing via the central bank ’ s printing press, which is prohibited under the national bank act. bis central bankers ’ speeches a further problem would arise if, in the future, a reduction in the money supply were to become necessary for monetary policy reasons. the money supply was originally expanded to satisfy the increased demand for francs. however, it is possible that demand may also fall again. if there were to be a sharp decline in demand, the snb would have to reduce the money supply again in order to keep monetary policy conditions stable. the simplest way would be to buy back swiss francs, namely by selling foreign exchange reserves. but if the foreign exchange had already been transferred to a sovereign wealth fund, this would no longer be possible. another hope expressed in connection with the creation of a sovereign wealth fund is better management of foreign exchange reserves. however, the snb already manages its foreign exchange in a professional manner and is considered to be a leading central bank in asset management. we have also invested in a broad range of assets for a number of years now. our portfolio is diversified over different currencies and asset classes, and we invest heavily in foreign shares and corporate bonds. equity exposure is 20 %, which is high for a central bank. on a long - term average, higher profits are only possible by taking higher risks. this would also apply to a sovereign wealth fund. however, higher risks also mean that profit fluctuations would be greater than before. of course, a sovereign wealth fund could hedge against certain risks. exchange rate risk represents the biggest risk for foreign currency investments. but it is precisely this risk that a sovereign wealth fund should not be allowed to hedge, as it would conflict with monetary policy. this is because hedging would result in upward pressure on the swiss fran