. however, due to its monetary policy mandate, the snb ’ s investment policy is subject to certain restrictions. it has to be designed in a way that helps the snb fulfil its mandate. to a certain degree, the function of our investment policy is to serve monetary policy. what does this mean exactly? objectives in applying its investment policy, the snb has two main objectives. the first is to ensure that its balance sheet can be used at any time for monetary policy purposes. investment policy may not restrict monetary policy in terms of either a possible expansion or a possible reduction of the balance sheet. the investment universe must be designed in such a way that we are able to purchase foreign currency and invest it quickly when necessary. but we must also be able to sell the investments again quickly if monetary policy requires it. the second objective of investment policy is to ensure that the currency reserves preserve their value over the long term. currency reserves serve to build confidence. they are used not just to overcome, but to also to prevent potential crises. currency reserves allow us to intervene in the market if the swiss franc weakens. moreover, irrespective of such extreme situations, we have to manage our currency reserves in the best interests of the country and thus make investments that retain their real value over the long term. implementation so, we pursue two objectives with our investment policy – ensuring the availability of the balance sheet for monetary policy purposes and preserving the value of our currency reserves. page 4 / 10 in order to achieve these two objectives, the snb ’ s investment policy is guided by a number of criteria. in addition, it has to meet two important requirements. let ’ s start with these requirements. first, we cannot hedge currency risks against the swiss franc. such hedging transactions would trigger additional demand for swiss francs, thereby increasing upward pressure on the currency. this would run counter to our current monetary policy, which is geared at reducing pressure on the swiss franc. second, in implementing our investment policy, we aim for minimal market impact. this is the fundamental distinction between investment policy and monetary policy. monetary policy measures are deliberately targeted to change market prices. they are intended to nudge monetary conditions in switzerland – interest rates or swiss franc exchange rates – in the desired direction. by contrast, the snb ’ s investment activity should not trigger any price changes. for this reason, when investing, we always take into account the absorption capacity of the markets. when

our currency reserves has grown. as a result, the balance sheet is more exposed than before to the volatility of the page 6 / 10 financial markets, especially to exchange rate fluctuations. we cannot hedge against these fluctuations because this would lead to an appreciation of the swiss franc. losses, therefore, cannot always be ruled out. what implications does this have? occasional losses, however substantial, are not fundamentally a problem for our monetary policy. as a central bank, we could still operate even if our equity capital were to become negative for a certain period. nevertheless, this is something we are determined to avoid. our policy on provisions and the profit distribution agreement are therefore geared towards ensuring a sound capital base. concluding remarks ladies and gentlemen, to end my speech, let me summarise my main points. we are maintaining our expansionary monetary policy. inflation in switzerland is still low. production capacity continues to be underutilised and the swiss franc remains significantly overvalued. many companies are still facing strong pressure to adapt. the negative interest rate and our willingness to intervene in the foreign exchange market remain necessary to ensure appropriate monetary conditions. these measures reduce pressure on the swiss franc and support economic activity, thereby stabilising price developments. we will continue to exploit our monetary policy latitude where necessary in order to guarantee price stability and support the economy. in so doing, we carefully weigh up the costs and benefits of possible measures. our investment policy ensures that we retain our room for manoeuvre in the implementation of monetary policy, even with an expanding balance sheet. at the same time, we invest the currency reserves with maximum value preservation and minimum market impact. a growing balance sheet, however, inevitably leads to greater fluctuations in annual results : increasing both absolute potential profit and absolute potential loss. it is therefore vitally important that we ensure a sound capital base through our policy on provisions and our profit distribution agreement. overall, the snb continues to face major challenges. we are experiencing an unusually long period filled with difficult tasks and decisions. so let me conclude by taking this opportunity, also on behalf of my governing board colleagues, fritz zurbrugg and andrea maechler, to thank our employees for their hard work and dedication. we also thank you, our shareholders, for your loyalty to the snb and your faithful support. let me also thank our young guests from the kantonsschule solothurn and the gymnase cantonal de nyon for their