##c, which would run counter to our monetary policy. incidentally, this is also the reason why a sovereign wealth fund should not be permitted to sell foreign currency. to sum up : a sovereign wealth fund would not make monetary policy easier but more difficult. sovereign money the other initiative that i would like to talk about today is the sovereign money initiative submitted some time ago. this has two main elements. the first one relates to household and corporate bank accounts, the second to the mechanism with which new money is put into circulation. the initiative calls for the creation of payment accounts for households and companies, to be held off - balance sheet by banks, just as securities custody accounts are now. these accounts would be fully covered by snb money. the idea is that this would prevent bank runs and thereby improve the stability of the banking system. a bank run typically occurs when customers fear that their bank will no longer be able to pay out their deposits. as payment accounts in a sovereign money system would be covered by snb money, there would be no more reason to doubt the security of these deposits. yet, this does not mean that the financial system would become more stable overall. for example, the sovereign money system cannot prevent financial bubbles, as these are based primarily on investor misjudgement. although the sovereign money initiative would somewhat complicate the financing of such misinvestments, it would not prevent them. improved bank capitalisation, which is something we have advocated, contributes considerably more to increasing the stability of the financial system than a sovereign money system. the second element of the sovereign money initiative is the so - called debt - free creation of new central bank money. money would enter circulation by the snb gifting it, so to speak, to the confederation, the cantons or directly to citizens. such money distribution would fuel the politicisation of monetary policy. the federal council has rejected the initiative without a counterproposal. it maintains that a sovereign money system would be an experiment for which there are no comparable models in other countries, and would carry risks for the swiss economy. the implementation of the sovereign money idea would entail a complete restructuring of today ’ s monetary system. this bis central bankers ’ speeches would give rise to great uncertainty, could jeopardise the financial centre and thus damage switzerland as a whole. the federal council also fears that the sovereign money system would harm lending and restrict the snb ’ s ability to conduct monetary policy. we share

had already steadily weakened against major currencies in the second half of 2014. furthermore, at the start of 2015, there were signs of further easing of monetary policy in the euro area. against this backdrop, the euro was expected to weaken further. in contrast to 2011, the environment at the beginning of 2015 was no longer characterised by swiss franc strength, but by broadbased euro weakness. in these circumstances, the minimum exchange rate was no longer sustainable. the snb could only have enforced it through ongoing foreign currency purchases of rapidly increasing magnitude. however, there would still have been no prospect of a long - term stabilisation of the situation. an uncontrolled expansion of the balance sheet would have compromised the snb ’ s bis central bankers ’ speeches ability to conduct monetary policy in the long term. continuing to uphold the minimum exchange rate was therefore no longer justifiable. delaying any decision to discontinue would also not have helped the situation. on the contrary, if we had not faced facts and had delayed abandoning the minimum rate, the turbulence on the foreign exchange markets would have been no less severe. the impact on the economy would have been just as great, while the losses on the foreign exchange reserves would have been considerably heavier. the swiss franc initially appreciated sharply on 15 january 2015. in the meantime, it has broadly declined, although it is still considerably stronger against the euro than before discontinuation. this is attributable to the persistent weakness of the euro. developments since january 2015 have confirmed that our assessment at the time was correct. current situation the discontinuation of the minimum exchange rate marked a shift in our monetary policy focus. it is now based on two key elements. the first is the negative interest rate, which is currently – 0. 75 %. this is charged on sight deposits held at the snb by banks and other financial market participants. the second is our willingness to intervene in the foreign exchange market as necessary, while taking the overall currency situation into consideration. our monetary policy is thus expansionary and aimed at easing pressure on the swiss franc, thereby ensuring price stability in the medium term. many feared a recession on the back of the discontinuation of the minimum exchange rate and the rapid appreciation of the swiss franc. yet our economy grew by 0. 9 % last year. this may not be a strong growth rate, but it is still a good sign. on the one hand, it