, us dollars. these acquisitions led to a significant increase in currency reserves, which rose from chf 95 billion in december 2009 to over chf 230 billion at the end of may 2010. the foreign exchange acquired through snb interventions has been placed in securities. the snb ’ s investment policy is founded on the criteria of security and liquidity, but also return. in order to satisfy the requirements of security and liquidity, the snb has focused on the purchase of liquid instruments of first - class quality. all investment activity is carried out according to a strategy based upon diversification, while also taking into account potentially major but low - probability events. a further aim of this strategy is to ensure maximum resilience of the snb balance sheet. for the sake of completeness, let me add that, given the accumulation of additional dollar reserves, the issuance of snb bills initiated in february 2009 to finance the snb stabilisation fund is no longer necessary. consequently, the snb will suspend its issuance of snb usd bills. the last auction will be held on 21 june 2010. as has already been mentioned by philipp hildebrand, the extent of foreign exchange interventions are leading to a higher risk concentration for the snb. however, monetary policy considerations remain paramount. furthermore, we need to keep the overall picture in mind. thus, since our portfolio is well diversified, no loss has been recorded overall since the beginning of the year. this is due, in particular, to investments in foreign currencies other than euro as well as our gold investments, which also constitute one of our main sources of risk. what is more, the important time period is the long term and over that horizon potential exchange rate losses should be offset ( at least in part ) by the return on foreign exchange investments. finally, it must be borne in mind that the snb has set aside substantial provisions to absorb any possible future losses. transition from a liquidity deficit to excess liquidity in the financial system the unconventional measures taken by the snb to combat the impact of the crisis and to avert deflation risks have led to an ample supply of liquidity to the financial system. therefore, we have witnessed a gradual shift from a liquidity deficit to a situation characterised by excess liquidity. in fact, before the crisis, banks had to obtain liquidity from the snb in order to satisfy their minimum reserve requirements. today, they have sufficient liquidity to function without having to

finance themselves via the snb. this situation of excess liquidity is of a permanent nature. the transition from a liquidity shortage to excess liquidity does not, however, change the snb ’ s monetary policy strategy, which is still aimed at stabilising the three - month libor within the target range set by the snb. the implementation of this strategy has nevertheless been adjusted to reflect the new liquidity conditions. in times of a liquidity shortage, the snb must supply the markets with liquidity to keep the libor at the targeted level. if there is excess liquidity, it must drain liquidity from the market in order to keep the libor at the same desired level ( cf. chart 3 ). this situation can be compared with that of a driver going up a mountain pass. driving up the hill, he pushes on the gas pedal in order keep the vehicle driving at a certain speed. on the way down, however, he must step on the brake continue to travel at the same pace. monetary policy with snb bills and reverse repos the snb is not the only central bank that finds itself in a situation of excess liquidity. the majority of central banks which have taken unconventional monetary policy measures are in the same position. central banks have a range of measures at their disposal to reduce this excess liquidity. after analysing the different alternatives, the snb decided to use a combination of snb bills and reverse repos. these instruments are perfectly in line with our monetary policy strategy. there is, however, still a range of alternative instruments available, should there be a need for them. let me explain briefly how the method chosen by the snb works. as i have already mentioned, the snb aims to keep the three - month libor within a certain target range. this rate depends on the level of liquidity in the financial markets. if there is excess liquidity, the snb must withdraw a certain amount to influence the level of the libor. in so doing, it uses a two - pronged approach : on the one hand, it issues snb bills with different terms. banks or investors who purchase these bills pay the snb with liquid funds, which are thus drained from the financial system. on the other hand, the snb also makes use of reverse repos in order to complete the withdrawal of liquidity achieved by the use of snb bills. in a reverse repo, the snb delivers