full - time equivalents. cf. final report of the group of experts for the further development of the financial market strategy, dated 1. 12. 2014 ; annex to the review of the swiss tbtf regime by international standards – basis for an evaluation in accordance with article 52 of the banking act, p. 55. bis central bankers ’ speeches monetary policy during the financial and european debt crises the swiss economy is currently being hit by external shocks. in such a context, the snb aims to dampen short - term costs without jeopardising the long - term goals of monetary policy. the challenge for monetary policy in recent years has been to react to sudden developments in international markets and geopolitical risks that have endangered switzerland ’ s real economy and price stability in the medium term. the goal has been to steer policy responses in a way that reduces short - term costs while preserving the stability achieved over the past four decades of independent monetary policy. in order to meet these challenges, we have had to use unconventional instruments for the implementation of monetary policy. our current monetary policy is based on two pillars. these are designed to dampen upward pressure on the swiss franc. the first pillar is the negative interest rate on sight deposits at the snb. the second pillar is our willingness to intervene on the foreign exchange market as required. the snb monitors developments in the foreign exchange market and their potential effects on the swiss economy very carefully. at a global level, interest rates have been on a downward trend for more than two decades ( cf. chart 4 ). this development reflects, on the one hand, an overall decrease in inflation. on the other, quantitative easing programmes implemented by various central banks in response to the financial crisis have brought global interest rates close to zero. in an interconnected financial world, it was impossible for swiss interest rates to diverge from this strong and persistent downward trend. very low global nominal yields have reduced the interest rate differential between foreign and swiss interest rates. by the end of last year, the spread between short - term interest rates on assets denominated in euros and those denominated in swiss francs had almost vanished. as i mentioned earlier, interest rates have traditionally been lower in switzerland than abroad. however, during the financial crisis, foreign interest rates decreased to a greater extent than their swiss counterparts. with both foreign and swiss interest rates close to zero, the spread between euro and swiss interest rates disappeared. this created upward pressure on the swiss franc. a

over decades guarantees a stable currency. this constitutes a perfect numeraire for banking activities. second, the money issued by the snb, i. e. deposits that banks hold at the snb and banknotes, is the swiss legal tender. it represents the anchor of the swiss monetary system. if their customers wish, banks exchange the money in customers ’ deposits against banknotes issued by the snb. third, banks use the snb ’ s infrastructure, the swiss interbank clearing system, for their payment transactions. and fourth, the snb provides liquidity to the banks, which they hold in the form of deposit accounts or banknotes. in this way, the snb ensures that the payment system functions well and the demand for banknotes can be satisfied. by fulfilling its mandate, the snb thus provides fundamental services for the operations of banks and the financial sector. at the same time, the snb needs the financial sector in order to fulfil its mandate. the financial sector transmits the snb ’ s monetary policy actions to the swiss economy through its lending and borrowing decisions. based on short - term money market conditions set by the snb, banks adjust the cost of borrowing for households and firms. through their core business, banks thus contribute to monetary policy transmission. more generally, the financial sector transmits changes in the short - term policy interest rate to other assets of different maturities. the resulting change in overall yields on swiss assets influences their relative attractiveness. this also affects swiss franc exchange rates. both exchange rates and interest rates then determine monetary conditions in switzerland, and thus eventually output and inflation. although short - term interest rates are the main monetary policy instrument, the snb has, in recent years, been using exchange rate interventions as an additional tool. due to the safehaven status of the swiss franc, the snb has been active on the foreign exchange market. we are also willing to intervene, as required, as part of our current monetary policy. once again, banks have been at the heart of monetary policy transmission. they have acted as intermediaries of the snb ’ s foreign exchange interventions. 4 with depressed international demand and a strong swiss franc weighing on gdp, credit availability has been crucial for the domestic economy. low interest rates and ample liquidity provision by the snb have facilitated banks ’ intermediation activities. in short, the snb ’ s for further details, cf. lukas altermatt and roma