philipp m hildebrand : major challenges facing the swiss national bank speech by mr philipp m hildebrand, chairman of the governing board of the swiss national bank, at the general meeting of shareholders of the swiss national bank, berne, 30 april 2010. * * * mr president of the bank council dear shareholders dear guests i. the recession has run its course a little over a year ago, we were still in the midst of the worst financial crisis in post - war history. true, we were able to discern the first tentative signs that the tide might be turning, but the outcome was still highly uncertain. today, the worst is behind us. we can look to the future with a measure of optimism. yet the challenges that the crisis has left in its wake are still substantial. while 2008 will go down in history as an annus horribilis for the financial markets, 2009 was dominated by the gloomy economic environment. the global economy contracted for the first time since the second world war. the huge loss of confidence on financial markets in autumn 2008 caused economic activity to nosedive. indeed, one of the most striking features of this recession was the speed and severity with which economic growth dropped in a number of countries. faced with such a dramatic situation, governments and central banks across the world found themselves having to swiftly implement innovative support and rescue measures on an unprecedented scale, in a bid to stabilise the global financial system and limit the economic downturn. the decisive economic policy intervention was a key contributor in calming the markets, halting the downward spiral and clearing the way for economic recovery. as a small open economy, switzerland could not avoid being drawn into the global recession. the sharp fall in economic activity, which had begun in the second half of 2008, continued in the first half of 2009. around the middle of the year, the trough was reached and the economy began to grow again. over the year 2009 as a whole, gdp dropped by 1. 5 %, the largest decline since 1975. nevertheless, switzerland has so far weathered the effects of the financial crisis better than most industrialised economies. this may come as a surprise, given the importance of our financial centre. a deciding factor behind the comparative mildness of the recession in switzerland was private consumption, which proved to be an important buttress of growth. moreover, no major distortion was observed in the property market, and banks did not restrict access to lending. last but not least, the rapid and decisive expansion of

thomas jordan : repercussions of the financial markets crisis in switzerland summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at the zuger wirtschaftskammer, zug, 28 april 2008. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the turbulence in the financial markets that began in august 2007 is having a generally negative impact on the swiss economy and is spreading through different transmission channels. the downgraded growth prospects for the us economy are resulting in fewer imports from the rest of the world. since net exports and the global economic developments are of particular importance for switzerland, they are having a negative effect, which may be reinforced by the appreciation of the swiss franc. because of the major importance of banking in the industrial structure of the swiss economy, falling turnover on the financial markets can also affect switzerland more severely than other countries. moreover, rising credit risk premiums result in higher financing costs for companies, and the deterioration in bank balance sheets could be an additional factor in compromising the availability of credit in switzerland. finally, the increase in commodity prices has had a significant impact on the inflation rate in switzerland. despite the fallout from the financial crisis, the outlook for switzerland ‘ s economy remains good. in europe – which is crucial for switzerland – the economy will probably weaken only gradually. what is more, the swiss franc has only seen a moderate rise against the euro. as swiss households and companies are on a solid financial footing, they are shielded – so to speak – against a tightening in credit conditions. lastly, the stronger swiss franc vis - a - vis the us dollar has limited the impact of higher commodity prices. several other factors, like a robust labour market and a competitive industrial sector, could cushion the negative repercussions of the financial crisis in switzerland. against this backdrop, the snb is expecting real gdp to grow between 1. 5 % and 2 % this year. inflation should be below the 2 % mark again in the course of 2008. these forecasts still involve substantial uncertainties. given the present state of the economy, the current interest level seems to be appropriate. however, the snb will keep a close eye on further economic developments and inflation so that it is able to identify when action needs to be taken and react in a quick and flexible manner.