place? is the swiss banking system more resilient to crises today? please allow me to give you our take on this. i will first look at those banks with a domestic focus before moving on to the big banks. switzerland ’ s domestically focused banks were not at the centre of the financial crisis, and all in all the new regulations are also likely to have little effect on them ; their liquidity and capital buffers are mostly well above the regulatory minimum requirements. the stress tests that the snb regularly conducts to assess risks also show that the banking system is largely well capitalised. notwithstanding this, the risk appetite of domestically focused banks has increased again in recent years, not least due to the low interest rate environment. there are also imbalances on page 6 / 8 the mortgage and real estate markets. it is therefore important that the domestically focused banks are aware of the risks they have assumed and ensure that they remain well capitalised in the future. and what about the two big banks? both have clearly strengthened their resilience in recent years, and are on track to meet the required standards within the stipulated time frame. they have continually improved their capitalisation with respect to maintaining operations as a going concern and ensuring their loss - absorbing capacity in the event of a restructuring or orderly wind - down. 11 they have also put in place key organisational measures to increase their resolvability. for example, both have set up swiss subsidiaries that would continue their systemically important functions in switzerland in the event of a crisis. the big banks have therefore already made substantial efforts on this front. what still remains to be done? first, the process of building up capital to absorb losses in a resolution scenario must be completed, and this will be achieved in the near future. second, by the end of 2019 the two big banks have to demonstrate that in the event of a crisis, they would still be able to maintain the functions that are systemically important for switzerland. in other words, the swiss entities that cover the systemically important functions must be sufficiently independent of the remainder of the bank, both operationally and financially. in addition, plans for a restructuring or wind - down of the entire bank ( at the global level ) have still to be finalised. looking at the domestically focused banks and the big banks together, we can say that the resilience of our banking system as a whole has increased significantly. we are convinced that our banks are better able to withstand a crisis today than

between 1. 5 % and 2 %. this is lower than the growth rate we have observed since 2006. measuring the output gap is tricky, however, because certain favourable factors, such as the influx of skilled labour, the deregulation of certain domestic markets and increased global competition might have pushed up potential gdp growth. having said this, however, we should not overlook those factors which have the opposite effect. for instance, equipment investment has receded, which has a dampening effect on potential growth. moreover, even if capacity utilisation as a whole is not excessive, bottlenecks might occur in certain sectors of the economy. and, above all, experience has shown that the output gap is often underestimated during phases of growth. consequently, the risk of underestimating the output gap may now be greater than that of overestimating it. the third risk is associated with the future development of the swiss franc. as its exchange rate is determined by the market, it is subject to fluctuations. movements in the export - weighted swiss franc index alter the degree of restrictiveness of our monetary policy. normally, during periods of rising interest rates, this index tends to increase, thereby amplifying the effects of monetary policy by mitigating price increases in imported products and slowing the expansion in economic activity. this reaction pattern was not observed during the past two years, which could put pressure on interest rates. monetary policy decision before commenting our decision today, i would like to point out the changes that are shaping our current environment. in december 2005, when the present cycle of interest rate hikes began, we were concerned with the normalisation of the interest rate level – at the time the libor was at 0. 75 % – while allowing the economy to reduce its level of unused resources. our concern now is to ensure that monetary conditions are such that the healthy state of the economy does not jeopardise price stability in the medium term. we are still observing that the competitive pressure in the market is high, the labour market very flexible and that movement in the monetary aggregates is moderate. however, my analysis of the current situation has demonstrated that the inflation outlook has deteriorated in different respects since our last assessment : higher oil prices will have an impact on the consumer price index ; economic performance, which is better than expected, will result in an improved utilisation rate and increase pressure on prices and, finally, a renewed weakening of the swiss franc has neutralised the