mortgage market have focused on the confluence of several driving factors, including a loosening of us monetary policy at the beginning of the decade ; an easing of standards for mortgage lending, encouraged in part by a range of legislative and policy changes that aimed to make home ownership more accessible to households that had been historically underserved by mortgage lenders ; the rise of complex structured products, the overall riskiness of which proved to be difficult to properly monitor and assess ; fragmented and loose supervision of financial institutions which, among other things, kept us investment banks outside fed oversight ; and the inaccurate ratings of credit rating agencies. in the case of the philippines, the restructuring of our banking system in the aftermath of the asian financial crisis was achieved without the infusion of public funds. this helped avoid moral hazard issues mentioned earlier and actually promoted greater prudence in banking activities. and since most of our financial institutions were still in the process of strengthening their balance sheets when securitization began to be popular among investors abroad, their exposure to these structured products is relatively limited. thirdly, i cannot overemphasize the importance of a strong supervisory and regulatory framework. the fundamental rationale for banking regulation is to guard against moral hazard, as banks use and lend out funds sourced from deposits. in the philippines, the banking system has benefited from our continuous efforts to better monitor, mitigate, and manage risks. a package of banking reforms was implemented in the areas of risk management, corporate governance, capitalization, and information disclosure practices – such as rules to disclose detailed information on banks ’ restructured and nonperforming loans. going forward, our focus will be on further enhancing the regulatory and supervisory framework ; promoting market discipline in financial markets through enhanced reporting and disclosure requirements ; improving corporate governance through promotion of compliance with international accounting and financial reporting standards ; enhancing the implementation of risk - based supervision ; strengthening ties with other regulators ; continuing support for the development of a deep and efficient capital market, as well as the passage of necessary legislative reforms. globalization and financial liberalization much as the “ great moderation ” has highlighted the benefits of globalization, the recent global turmoil has also highlighted its challenges. there is no question that freer trade in financial products and services confers significant benefits – direct as well as collateral ones – to those countries that are prepared for it. these benefits come in the form of – among other things – portfolio diversification, greater access to foreign exchange, financial depth and technological transfers. at the same

totalling chf 90 billion in the first half of this year. on a trade - weighted basis, the swiss franc has strengthened some 5 % in real terms since the beginning of 2020. had we not intervened, the franc would have appreciated significantly more, and this would have placed an additional burden on our economy in an already exceptionally challenging environment. page 2 / 5 zurich, 17 december 2020 andrea m. maechler news conference final sprint in transition to saron let me now say a few words about the changeover from swiss franc libor to saron. the end of swiss franc libor is fast approaching. in november, the libor administrator launched a consultation procedure on the discontinuation of swiss franc libor as per end - 2021. market participants in switzerland may therefore only have around 12 months to complete the necessary work for a smooth transition to saron. only the heavily used tenors of us libor are expected to be granted an extension until mid - 2023. however, this will not affect the swiss franc libor i have been focusing on in my remarks. in order to ensure an orderly transition, it is vital that the changeover to saron on the credit and derivatives markets occur as early as possible. the supply of saron - based products on the credit market is increasing. for example, various banks have launched saron - based mortgages in recent months. however, the saron - based derivatives market is still significantly less liquid than its liborbased counterpart – turnover on the saron - based derivatives market remains considerably lower than turnover on the libor - based market ( cf. chart 4 ). as we do not have a consistently liquid government bond curve in switzerland, the interest rate swap curve is very important as a reference for pricing fixed - interest loans and bonds. with the discontinuation of swiss franc libor, this critical reference function will be performed by the saron - based interest rate swap curve. it is important that libor - based contracts that cannot be switched to saron before the end of 2021 are furnished with robust fallback clauses. the international swaps and derivatives association ( isda ) has recently published such fallback clauses for derivatives contracts. robust fallback clauses minimise the risks associated with the discontinuation of swiss franc libor, thereby providing a safety net. the snb itself continues to make progress with the changeover to saron – we will have