funds, life insurers and banks? the marked weakening in the economy would cast a pall over the earnings prospects of swiss companies, and swiss equities would come under pressure. although short - term interest rates in switzerland would no longer be negative, there would be little change in capital market interest rates owing to the deterioration in the economic outlook. all in all, the level of interest rates would thus remain low, and so too would the yields on long - term swiss franc bonds. ultimately, there would be scarcely any significant improvement for savers, pension funds, life insurers and banks. the same goes for the real estate market. although its momentum would be curbed somewhat if we were to cease charging negative interest, there would be little change in the low level of interest rates and the impact would therefore be limited. in the current situation, the risks to financial stability must be addressed with focused macroprudential measures. this will then curb demand for mortgages and real estate and strengthen banks ’ resilience. ladies and gentlemen, abandoning the negative interest rate in the current environment would weigh heavily on the swiss economy. this would not help either savers or pension funds, nor would it be beneficial for financial stability. in other words, as things stand at present, removing the negative interest rate would not be in the interests of our country as a whole. focusing on the big picture we introduced the negative interest rate after careful consideration of the advantages and disadvantages. we continually assess its effectiveness, and objectively analyse the costs and benefits. global economic activity has weakened in recent months. although gdp growth is likely to pick up again somewhat after stagnating in the second half of 2018, the inflation outlook for this year and next is subdued. in addition to this, given the economic and political uncertainty in many countries, the situation on the financial and foreign exchange markets remains fragile. page 6 / 8 against the current backdrop, our unconventional monetary policy with the negative interest rate and our willingness to intervene in the foreign exchange market as necessary remains both essential and appropriate. and this is in part also because it does not attach greater weight to any individual issues over others, and is instead at all times focused on the interests of switzerland as a whole. the negative interest rate has its place among the instruments at the snb ’ s disposal, which include conventional and unconventional measures alike. it is incumbent on us to use the instruments best suited to tackling the situation at hand

jean - pierre roth : switzerland in the midst of the euro area - situation and outlook summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the south tyrolean industrialists ’ association, bozen, 14 october 2003. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * in the past decade, the european currency landscape has undergone fundamental changes. the european central bank today enjoys an excellent reputation as an independent central bank. within a very short time, the euro has become most significant as an investment currency, and it continues to gain ground. since 2002, from the time it took physical form, it has also been legal tender in twelve eu countries. the introduction of the single currency has also had manifold implications for switzerland. first of all, the euro has made business for swiss companies easier. foreign currency management has been facilitated, and the danger of currency turbulences, as witnessed under the european monetary system ems, has diminished. the euro is used as a payment instrument in switzerland approximately to the same extent as formerly the national currencies of our immediate neighbours. it is possible that it will yet gain some significance in this respect. there is no risk, however, of it superseding the swiss franc as payment instrument. as an investment and issuing currency, the euro represents increased competition, but the swiss franc will remain an attractive diversification currency. the greater price transparency in the european market brought about by the euro ’ s launch also has an influence on switzerland ’ s domestic economy, heightening awareness of the need for structural changes. finally, initial fears that the exchange rate relation between the swiss franc and the euro might be destabilised by the introduction of the euro have not come true. notwithstanding a few fluctuations, the relation between the two currencies has remained remarkably stable. overall, therefore, the cohabitation between the swiss franc and the euro is definitely a “ success story ”.