thomas jordan : strong swiss franc and large current account surplus – a contradiction? introductory remarks by mr thomas jordan, chairman of the governing board of the swiss national bank, at the swiss institute of international studies, zurich, 19 february 2013. * * * the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ) for almost 18 months now, the swiss national bank ( snb ) has been enforcing the minimum exchange rate of chf 1. 20 per euro with the utmost determination. the need for this measure is widely recognised, both domestically and abroad, due to the substantial appreciation of the swiss franc in summer 2011. at the same time, however, there are isolated voices claiming that given the large current account surplus, the swiss franc is too weak, and that the snb should allow the currency to appreciate in order to contribute towards reducing global imbalances. this view is based on a lack of knowledge about the situation in switzerland. specific factors are responsible for the swiss current account surplus. the balance on the trading account, for instance, makes only a modest contribution. the most important elements with regard to the current account surplus are the following : first, investment income from switzerland's substantial net international investment position, second, financial sector earnings from business with customers abroad, which is traditionally of significance for switzerland, and third, earnings from merchanting, which have risen sharply over the past decade. the current account surplus is also statistically overestimated. these three most important elements are dependent on developments abroad, international financial markets, and global demand for commodities. the swiss franc exchange rate, by comparison, does not play a decisive role. there is thus no contradiction between having a strong swiss franc and a large current account surplus. nor is the surplus a suitable measure for assessing switzerland's share in global imbalances. it is much more the case that switzerland and its extensive level of direct investment abroad contributes significantly to balanced global economic growth. snb monetary policy is focused on ensuring price stability. in so doing, it takes due account of economic developments. to fulfil this mandate, the snb must secure appropriate monetary conditions. the current account surplus does not play a role in monetary policy. in an open economy like switzerland, however, sizeable exchange rate fluctuations have a strong impact on production and prices. in the current environment, and with interest rates close to zero, the minimum exchange rate is therefore

bruno gehrig : review of the swiss economy : end - of - year media news conference introductory remarks by prof dr bruno gehrig, president of the swiss national bank, at the end - of - year media news conference, zurich, 7 december 2001. * * * financial markets characterised by economic slowdown development on the financial markets during the current year was characterised by a surprisingly significant weakening of the economy affecting all the major economic regions around the world. the slowdown was most pronounced in the us, but europe is experiencing a considerable setback in growth as well. inflationary pressure, already weak, thus eased further. the central banks took advantage of the rapidly increasing flexibility and lowered their key rates, in some cases down to historical lows. up until the middle of the year, the prevalent opinion in the financial markets was that - buoyed by the fed's marked interest rate cuts - the us economy, along with the global economy, would stage a fairly swift recovery from the deterioration in the technology sector and the associated weak investment activity. for this reason, the second quarter was characterised by a recovery on most stock markets, increasing bond yields and a us dollar defying gravity. by mid - year it became clear that the cyclical decline was likely to be more serious and to last longer. this reversal of opinion led to investors gradually becoming more risk averse. equities portfolios were regrouped and invested in the money market and in bonds. growing pessimistic sentiment vis - a - vis the economy led to lower capital market yields, declining stock valuations and a weaker us dollar. the general pattern of activities on the financial markets was and still is characterised by a marked parallelism in price fluctuations. on the one hand, this is a reflection of the synchronisation of the current and expected economic development which has been apparent for several quarters and which in turn leads to parallel monetary policy reactions. on the other hand, the widespread globalisation of capital market processes has considerably intensified - at the expense of country - specific differentiations - the impact of the valuation factors effective worldwide. the shock of 11 september the attack of 11 september hit the world economy and the financial markets in a state of instability. it did not trigger any new trends, but magnified developments which were already under way. business and consumer confidence suffered a severe blow, which further dimmed economic prospects in the us and in europe. the sudden increase in risk aversion led to drastic