shared with other economic agents. this structure enables a more effective resource allocation mechanism through more effective financial markets in the economy as a whole. besides their contribution to the effectiveness of the resource allocation mechanism, the development of derivatives markets helps the financial sector to grow. hence, derivatives markets contribute to the increase in national income and employment by indirectly encouraging more effective resource allocation and by providing value added. derivatives markets introduce new investment instruments to the financial intermediary system, or in a broader sense, to the financial system. this, in turn, increases the number of instruments investors can use in order to diversify their portfolios and thus deepens financial markets. if we analyze what the diversity in investment instruments means for our country, we see that thanks to the derivatives markets, both real sector and financial sector investors will be able to manage their risks in diversity in line with the world markets and this structure will help our country to integrate with world markets. here, i would like to draw your attention to the large number of studies that stress the favorable effect of the presence of sufficiently developed, deepened and efficient derivatives markets on foreign direct investments. dear participants, in addition to all these benefits derivatives markets provide to the economy, they bear extra importance as a complementary element of financial markets in terms of their interaction with monetary policy and thus with the central bank. as it is known, establishing financial stability is one of the most important factors to be considered by all central banks that have set price stability as their primary objective. in this framework, derivatives markets, which help to sustain financial stability through their contribution by reducing volatility in the markets, support central banks in maintaining financial stability. the second contribution of derivatives markets to the monetary policies of central banks is that thanks to their functions in risk management and in providing information, they expedite and activate the transmission mechanism used by monetary policy in giving direction to the economy. international swaps and derivatives association, news release on april 9, 2003. central banks adopt a long - term perspective in their target and try to affect the long - term movements of economic variables with the decisions they take. in this framework, it is crucial for a central bank to have as much information of a long - term nature about the economy and the future as possible. hence, derivative markets play a crucial role in enlarging the information set used in monetary policy via the information they provide about the future. the critical point here is that while derivatives markets enable the enlargement of the information set

therefore been willing to accept a lower return on investments denominated in swiss francs. over the past three decades, interest rate levels have fallen markedly around the world. chart 2 shows that the yields on 10 - year government bonds issued by advanced economies – illustrated here by switzerland ( in red ), germany ( in blue ), the uk ( in orange ) and the us ( in green ) – have been on a downward trajectory since the early 1990s. nominal interest rates have fallen in part because many central banks successfully managed to tackle the high rates of inflation that prevailed during the 1970s and 1980s. page 5 / 13 but not only nominal interest rates have fallen ; real rates have also trended downward globally due to several powerful structural drivers. four drivers are mainly responsible for the sustained decline in real interest rates : changes in demographics, mostly due to rising life expectancy ; a secular decline in productivity growth ; the integration of emerging - market economies with high savings surpluses into global financial markets ; and a stronger overall preference on the part of investors for safe and liquid assets. these structural drivers are not determined by central banks. the current low interest rate environment makes it harder for central banks to make their monetary policy sufficiently expansionary in times of crisis. to be expansionary, the policy rate must be set such that short - term real interest rates are below the interest rate that balances saving and investment, also referred to as the equilibrium real interest rate. the structural factors mentioned earlier have likely also driven down the equilibrium real interest rate. many central banks have thus had to cut their policy rates to zero in recent years – or even take them into negative territory – in order to address economic crises. what happens if the swiss franc ’ s interest rate differential versus other currencies narrows but the franc continues to be seen as a safe haven? this development pushes up demand for swiss franc - denominated investments and exerts appreciation pressures on the currency. this is precisely the challenge we have been facing ever since the outbreak of the global financial crisis in 2007. in order to reduce the attractiveness of the swiss franc relative to other currencies, in january 2015 the snb lowered its target range for three - month libor into thenunprecedented negative territory ( between −0. 25 % and −1. 25 % ) and simultaneously imposed a negative interest rate of −0. 75 % on the sight deposits which banks hold at the snb. 2 this negative rate helps to