amounted to chf 118 billion. after distribution of the proceeds from the gold sales in spring 2005, the invested funds contracted by chf 21 billion. furthermore, higher profit distributions to the swiss confederation and the cantons should deplete the existing distribution reserve by 2012, thus decreasing our assets by a further chf 10 billion as compared with the end of 2004. from today ’ s perspective, this leaves the snb with assets in the region of chf 85 billion. at present, the national bank ’ s assets comprise 25 % swiss franc investments, 45 % foreign exchange reserves and 30 % gold. foreign currency investments generate interest and dividend income. given the globally low inflation rates, the nominal interest income is currently substantially lower than in the 1980s and 1990s. in addition, the valuation of bond and equity portfolios, foreign exchange positions and gold holdings at market prices result in valuation gains and losses. meanwhile, the interest income on swiss franc assets – primarily repos – is marginal. in 95 % of cases, the massive fluctuations in our income can be attributed to the fluctuating values in gold and foreign exchange positions. experience has shown that valuation gains and losses on financial investments tend to level out again in the long term. based on these conditions, we thus estimate the earnings potential of our assets to be between 2 % and 3 %, which translates into an income of between chf 1. 7 and chf 2. 5 billion per annum on the total assets of chf 85 billion. given the fluctuations in the exchange rate and gold price, however, the earnings generated can deviate greatly from this amount. for instance, the marked increase in the gold price this year has resulted in valuation gains of roughly chf 8 billion to date. should the gold price drop back next year to its end - 2003 level, however, this would lead to a valuation loss of over chf 7 billion. long - term income estimates should not be based on such unusual gains and losses. some of the income is allocated to provisions, thereby ensuring the growth of the currency reserves necessary for monetary policy. this allocation ( currently approximately chf 1 billion per annum ) should be made in proportion to nominal gdp growth. after deduction of the snb ’ s operating expenses of currently chf 250 million, roughly chf 1 billion remains for distribution to the confederation and cantons. based on the assumptions regarding the earnings potential of our assets, we can expect a distributable annual profit

jean - pierre danthine : market developments, swiss monetary policy and foreign exchange reserve management introductory remarks by mr jean - pierre danthine, member of the governing board of the swiss national bank, at the half - yearly media news conference, berne, 16 june 2011. * * * in my remarks, i would like to examine three topics. first, i will comment on developments in the international financial markets. then i will briefly address the situation in the swiss franc money market and the implementation of monetary policy. finally, i will talk about the management of the foreign exchange reserves. developments in the international financial markets developments in the international bond, share and foreign exchange markets are mixed and, as before, characterised by relatively high volatility. the relatively favourable global economic developments and the fact that the balance sheets and the liquidity situation of corporations outside the financial industry are in relatively good – in some cases very good – shape are having a positive effect. by contrast, the balance sheets of many governments reflect the consequences of crisis measures and increasing structural debt problems. thus, in recent quarters, the financial markets have presented a mixed picture. signs of an improvement in the prevailing mood have been followed by setbacks attributable to the serious impending challenges. at the beginning of the financial crisis, these were mainly concentrated in corporations ’ balance sheets. since then, the market has increasingly shifted its focus towards the risks associated with government debt. such fundamental changes in investor risk assessment influence not just the prices of the affected bonds. they also impact on other investment categories and, therefore, as i will explain later, on the financial markets in general. allow me to begin by addressing the most serious developments. the european sovereign debt crisis is far from over. in comparison to last year, it has again worsened. thus the credit risk premia of euro countries with large debt burdens continued to rise ; compared to the previous year ’ s average value, the risk premia have approximately doubled. that the debt problem in the euro area has worsened is apparent not just on the bond markets. on the foreign exchange market, the chf / eur exchange rate, in particular, reacted strongly, attaining new all - time high levels. since, at the same time, the us dollar was still tending lower, the chf / usd exchange rate also climbed to extreme levels. the weak dollar has to do with doubts about the robustness of the us economy in the wake of diminishing fiscal and monetary