, 0 8, 7 13, 0 5, 0 3, 0 2, 4 1 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 sources : thomson reuters and nbs. * weighted average interest rate on rsd loans, 3 - month moving average ( up to september 2010, the date were exclusively used for research purposes of the nbs ). 20, 0 0, 0 - 5 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 source : nbs. monetary policy accommodation fully translated into reduced costs of borrowing of corporates, households and the government. since may 2013, interest rates on new and existing dinar household loans have been halved, and those in the corporate segment turned even three times lower, which gave an impetus to disposable income, investment and economic activity. today interest rates on dinar government securities are by around 7 percentage points lower ( depending on maturity ) than in may 2013 when we embarked on monetary policy easing. the dinar yield curve was extended to 10 years, with the interest rate of 4. 80 %, while in october 2014, when the ten - year dinar security was issued for the first time, it measured 13 %. today, this maturity chart 7 significantly reduced interest rates on dinar government bonds ( annual level, in % ) chart 8 interest rates on dinar loans are at a minimum ( annual level, in % ) 12m 5y 3m 2y * 7y 10y 3y 6m 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 source : ministry of finance. * excluding coupon securities with the rate linked to the nbs key policy rate. 20. 6 16. 4 10. 1 5. 1 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 non - financial corporations - new business households - new business non - financial corporations - outstanding amounts households - outstanding amounts key policy rate source : nbs. accounts for around 15 % of the total portfolio of dinar government securities. apart from the decline in the risk premium and financing needs of the country, monetary policy easing also contributed to a sizeable reduction

monetary policy because they not only know our goal for inflation, but also how we judge future inflationary pressures. • our third step towards more transparency has been to explicitly communicate our operational target. we announce our target as a 1 % band on short - term interest rates, that is, on the three - month libor. we thus regularly offer market participants a quantitative indicator of changes in our monetary policy stance. our experience with the systematic communication of our monetary policy during the past six years has been very positive. market predictions of monetary policy measures have been accurate, leading to lower volatility in financial markets and improving the effectiveness of our policy measures a prime example of this is the most recent increase in our operational target in march 2006. an analysis of interest rate movements shows that the increase of our operational target by 25 basis points was almost fully anticipated by financial markets prior to the announcement. contrary to what many believe, a central bank does not lose any prestige in seeing its policy correctly anticipated by the markets. it is just proof of a well - understood monetary strategy. 3. credibility - words are not enough in switzerland, the systematic communication of monetary policy has had the desired effect of getting market participants to adapt their expectations well before actual policy interventions are made. does this mean that the swiss national bank now only has to indicate its intentions in order to influence interest rates? or as some academics and practitioners have posed the question : can central bankers now replace open market operations with " open mouth " interventions? considering the recent tightening of monetary policy in switzerland, one might be tempted to agree that open mouth operations are sufficient to move interest rates. after all, short - term interest rates rose long before an increase in the operational target was announced or before we raised the actual interest rates on repo transactions. however, this interpretation of the data ignores one crucial issue. interest rates moved upwards before the swiss national bank adapted its operational target or its repo rate because financial markets trusted that we would increase interest rates. given our objectives and our previous track record, it was credible that we would hike interest rates in the given economic environment. central bank transparency can only improve monetary policy effectiveness if it increases the predictability of future monetary measures. i would like to emphasise that predictability relies not just on information and the communication of intentions, but also on whether the public trusts a central bank to realise these intentions. central bankers can thus only benefit from transparency if their statements about future monetary policy are credible. ultimately, we know