speech embargo 27 april 2018, 10. 00 am comments on monetary policy and banking regulation 110th ordinary general meeting of shareholders of the swiss national bank thomas j. jordan chairman of the governing board swiss national bank berne, 27 april 2018 © swiss national bank ( speech given in german ) page 1 / 8 mr president of the bank council dear shareholders dear guests it gives me great pleasure to welcome you to our annual general meeting. as is customary, the first part of my speech will be devoted to comments on the current economic situation and monetary policy. ten years after the start of the global financial crisis, we can now look back on a year in which economic momentum has been much more positive – both in switzerland and worldwide. the question is : has the global economy now finally completed its unusually sluggish recovery process? as i will show, there are indeed grounds for optimism, but it is still too early for this to give way to euphoria. in the second part of my speech, i would like to look at the state of play in banking regulation. a decade on from the global financial crisis, we should not just be asking whether we have recovered from the consequences of this event ; we should also take stock of what we have done to improve the ability of our banking system to withstand future crises. as i will set out, the regulatory measures put in place have clearly strengthened the resilience of our banking system, and we therefore have reasons to be optimistic in this regard as well. that said, if we are to sustainably safeguard the stability of the financial system, it is imperative that we implement in full the regulatory measures that have already been agreed. we must also continually review them to ensure they are fit for purpose. let me begin with some comments on the current economic situation and monetary policy. the economic situation and the snb ’ s monetary policy economic situation the swiss economy improved continuously last year. capacity utilisation increased and unemployment declined. real gdp in the fourth quarter of 2017 was up 1. 9 % year - on - year, while inflation also returned to positive territory last year for the first time since 2011. the improved economic situation is not only attributable to the upturn in the global economy. there have also been favourable developments on the foreign exchange markets, as the swiss franc has weakened since the second half of 2017, against the euro in particular. this has boosted the price competitiveness of export - oriented industries and provided welcome relief for

the swiss economy. the swiss franc ’ s trade - weighted real external value is currently around the same level as prior to the discontinuation of the minimum exchange rate in january 2015. there has thus been a reduction in the significant overvaluation, but our currency nevertheless remains highly valued. page 2 / 8 monetary policy with a view to ensuring appropriate monetary conditions, we are continuing to pursue our expansionary monetary policy. this is based on the negative interest rate that banks and other financial market participants are charged on their sight deposits at the snb and on our continued willingness to intervene in the foreign exchange market as necessary. both instruments remain essential as the situation is still fragile. while the foreign exchange market has largely shrugged off recent equity market turbulence, circumstances in the financial markets – and thus by extension monetary conditions for the economy – could rapidly deteriorate again. such a development would be undesirable in the current environment. inflation is now within the range that the snb equates with price stability, and capacity utilisation in the economy has continued to improve. nevertheless, inflation remains low and inflationary pressure is modest despite our expansionary monetary policy. tightening monetary conditions would be premature at this juncture, and would risk unnecessarily jeopardising the positive economic momentum that has been established. the swiss economy picked up markedly last year against a positive global economic backdrop. however, we should not let ourselves get carried away. despite the easing on the foreign exchange market in the past twelve months, both short - term ( cyclical ) and longer - term ( structural ) challenges remain. competition with other business locations around the world remains as intense now as it was prior to the crisis. switzerland will only be able to preserve its economic competitiveness and prosperity if its companies continue to be highly flexible and innovative, and if our politicians succeed in maintaining our country ’ s particularly favourable economic conditions. turning now to the second part of my speech, i would like to once again take a look back at the global financial crisis. regulation ten years after the ubs incident banking system weaknesses exposed by financial crisis almost ten years ago, the federal government, finma 1 and the snb were forced to take steps to stabilise ubs and the swiss financial system, with the state and taxpayers having to temporarily take on the big bank ’ s risks. many other countries found themselves confronted with similar problems and also had to rescue banks. the financial crisis brought to light fundamental