andrea m maechler : how negative interest works and changes in the management of foreign exchange reserves speech by ms andrea m maechler, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 10 december 2015. * * * accompanying charts can be found at the end of the speech. in my remarks today, i will begin by talking about developments on financial markets since the middle of the year. then i will discuss the way in which negative interest works. i will conclude with a report on changes in the way we manage our currency reserves. situation on the financial markets i will start with the situation on the financial markets. financial market developments since the middle of the year have mainly been shaped by three topics : the uncertainty surrounding the first interest rate move by the federal reserve, monetary policy easing measures by the european central bank ( ecb ) and concerns about growth prospects in the emerging economies, particularly china. in mid - august, disappointing economic data and an unexpected depreciation of the renminbi against the us dollar resulted in a sharp decline in the chinese stock market. the fallout was also felt by stock markets of other emerging and advanced economies in short succession. after volatility on the stock markets had increased sharply at times, investors ’ appetite for risk gradually returned at the end of september. favourable economic data from the us and the euro area contributed to the more positive sentiment. in addition, concerns about growth in china recently slipped into the background again. the stock markets of the advanced economies, which have since been able to partially recoup their losses, were the main beneficiaries of this recovery. by contrast, in the emerging economies, the wave of selling has had a lasting impact. in the most recent period, the msci emerging markets index – calculated in local currency – was still approximately 12 % below its level at the end of june. stronger signals of diverging monetary policy stances between the euro area and the us were also reflected on the foreign exchange markets. on the one hand, the prospect of higher interest rates in the us boosted the us dollar. on the other, it put the currencies of emerging economies under pressure. since mid - year, the us dollar has appreciated by 4. 5 % on a tradeweighted basis. the euro initially gained ground at times as a result of uncertainty in the emerging economies. however, after the ecb had held out the prospect of further

philipp hildebrand : the swiss national bank ’ s ability to act in the crisis summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the executive mba hsg, universitat st gallen, st gallen, 21 january 2009. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the global financial system is in the midst of the biggest crisis of the postwar years. above all, the crisis is the most complex of this period. problems in the us sub - prime mortgage market led to the breakdown of both markets and general trust. in particular, the interbank market, the nerve centre of the financial markets, froze up for several months. governments and central banks managed to prevent the financial system from collapsing. the interbank market has been revived and risk premia have come down from their former record levels. in the meantime, however, the financial crisis has worked its way through into the real economy, which is now moving into a sharp downturn. in order to fight the crisis, the central banks have lowered their key interest rates aggressively. the instrument of the swiss national bank ( snb ), the repo rate, has practically reached zero. however, this certainly does not mean that the snb is incapable of action. if needed, there are other options available. the national bank can extend the terms of repo transactions or give consideration to the purchase of government and corporate bonds. where necessary, the snb may also, for example, sell an unlimited amount of swiss francs against foreign currency in order to prevent an appreciation of the swiss franc or even to bring about a devaluation of the national currency. the snb is very well aware that the determined route it is pursuing in fighting this historic crisis is associated with long - term risks. at the same time, it is firmly convinced that the risks involved in not following this course would be considerably greater. in this spirit, it is facing up to the task of fighting the crisis while at the same time maintaining a watch on the longterm aspects. at some point, the moment will come when the national bank decision - makers will need the courage to do what is right in the long term even if it is not popular in the short term.