soared. as we all know, these investments include those in the swiss franc. the swiss currency had already gained in value in the second quarter. however, between july and the beginning of august, it appreciated very substantially within a very short period. in august 2011, the swiss franc reached an all - time high against both the euro and the us dollar, in both nominal and real terms. ladies and gentlemen, in august 2011, the swiss franc was massively overvalued, according to any yardstick. in addition, in practically the same period, the international economic environment had become noticeably gloomier. this situation presented an acute risk to our economy, as well as carrying the threat of a deflationary trend. consequently, the bis central bankers ’ speeches snb reacted fast and announced an unscheduled interest rate reduction on 3 august. in addition, from this moment onwards, it increased the supply of swiss franc liquidity by a hitherto unprecedented amount, in several steps, with the aim of weakening the swiss currency. overall, the liquidity measures achieved the expected results. they brought about significantly lower interest rates in the swiss franc money market – interest rates that were, at times, even negative. this tended to weaken the attractiveness of swiss franc investments. thus the upward trend of the swiss franc against the euro was checked for the time being. however, the exchange rate remained very volatile, due to the persistence of negative reports from abroad, and at the end of august the swiss franc appreciated again. in this market environment, which was extremely uncertain and nervous because of the european debt crisis, the liquidity measures were ultimately insufficient to halt the appreciation of the swiss franc. in recognition of this fact, the snb decided to introduce a measure which was exceptional in every respect. on 6 september, the snb set a minimum exchange rate of chf 1. 20 per euro. it stated that it would enforce this minimum rate with the utmost determination and was prepared to buy foreign currency in unlimited quantities for this purpose. this policy is still in force, without any restriction. the impact on the swiss economy of the deterioration in the international environment as well as the exchange rate movements in july and august had been steadily increasing. economic activity weakened significantly over the course of 2011 and the pressure on profit margins intensified further in many industries. however, in the past few months there have been growing signs that the economic situation in switzerland has stabilised

and potential partners. regulators should especially support partnerships that combine the strengths of community banks and fintech companies, which have a track record of success. i also believe the federal reserve should allow banks to conduct shared due diligence on potential partners. if several banks use the same third - party service provider and are open to collaborating, they should be allowed to pool resources instead of duplicating one another ’ s work. these approaches would not only have the benefit of increasing clarity and transparency for community banks, but could also be beneficial for fintech companies that hope to become third - party providers. second, clear and transparent guidance is most helpful when it is consistent. i have previously discussed my view that guidance on third - party relationships should be consistent across banking agencies. no one benefits when banks and their potential partners or other vendors have to navigate unnecessary differences in guidance between agencies. to that end, the federal reserve is in the process of working with the other banking agencies to update our third - party guidance. as part of this process, i believe that the banking agencies should all have consistent expectations for third - party - 12 relationships, and that the federal reserve should, as a starting point, move toward adopting the office of the comptroller of the currency ’ s guidance. third, i believe we can improve transparency with regard to our supervision of third parties. through our service provider supervision program, we regularly conduct exams of many third - party service providers. while we make the outcomes available to banks that are clients of a supervised service provider, i believe we can go a step further to increase transparency by also making information that may be useful about our supervision of key service providers available to banks. this could take a number of forms, such as being more transparent about who and what we evaluate. of course, moving forward in these areas requires careful consideration and interagency collaboration, and i have asked our staff to work with other agencies to develop and propose workable options for giving banks the benefit of the knowledge that supervisors have about their potential providers in an appropriate manner. finally, i believe regulators and supervisors have a role to play in ensuring that regulatory burden is tailored to bank size, risk, complexity, and capacity. knowing the burden that third - party monitoring in particular can present to employees of the smallest banks, i have also encouraged federal reserve staff to consider options for further tailoring our expectations for community banks with assets under $ 1 billion in this area. collectively, i view these as important steps