exchange controls to money supply management under floating exchange rates, the swiss national bank 1907 – 2007. bis central bankers ’ speeches further monetary policy expansion in the euro area ( from mid - 2014 ) now we come to the third phase, shaped by quantitative easing in the euro area. economic recovery in the euro area was slow, although the ecb ’ s promise in july 2012 to do everything necessary to preserve the euro greatly reduced market uncertainty. while the economy was tentatively getting back on its feet, inflation in the euro area dipped below 2 % at the end of 2013 and continued to fall from there. at the beginning of 2015, it slid into negative territory, giving rise to concerns about whether inflation expectations were well anchored ( cf. chart 13 ). in june 2014, the ecb lowered its main refinancing rate to 0. 15 % and its deposit rate to below zero. today, they are at 0. 05 % and – 0. 3 % respectively. in lowering the interest rate into negative territory, the ecb followed the example of danmarks nationalbank, which had already introduced negative deposit rates for banks in 2012. the primary goal of the ecb was, however, not the same as that of denmark ( which was to reduce capital inflows ) ; instead, it sought to increase inflation by stimulating lending. 6 from mid - 2014, the ecb sent ever clearer signals that it would be substantially easing its monetary policy. at the same time, there were increasing signs that the us federal reserve would be exiting its zero interest rate policy. against this backdrop, the euro began to depreciate considerably not only against the us dollar, but also against the pound sterling. between mid - 2014 and the beginning of 2015, the euro lost almost 15 % against the pound and more than 20 % against the us dollar ( cf. chart 14 ). a phase of general euro weakness set in. finally, on 22 january 2015, the ecb announced a quantitative easing programme going well beyond market expectations in terms of length, target volumes and the wide range of the securities eligible for purchase. the euro lost even more ground against the us dollar and the pound sterling. for its neighbours, the ecb ’ s monetary policy easing had both positive and negative effects. on the one hand, the measures promised to support economic recovery in the euro area, which, thanks to real economic linkages, would also benefit neighbouring states. on the other hand, as with the us dollar and the

the riksbank also began its own quantitative easing programme and announced that it would intervene on the foreign exchange market if necessary. the czech national bank reacted with more foreign exchange market interventions, but decided not to implement negative interest. the table shows values for november 2014, since the snb ’ s announcement in december of a rate of – 0. 25 % on sight deposits with effect from january 2015 immediately impacted market interest rates. by january 2016, the situation had eased enough for danmarks nationalbank to raise the interest rate to – 0. 65 %. bis central bankers ’ speeches by discontinuing the minimum exchange rate, the snb regained some of its ability to conduct monetary policy. the new monetary policy stance is beginning to have an impact. since the minimum exchange rate was discontinued, there have been periods of great uncertainty on the financial markets in connection with greece, but also with china and other emerging economies. this would normally have caused the swiss franc to appreciate, whereas the franc has actually weakened slightly over the last 12 months. nonetheless, the swiss franc remains considerably overvalued against the euro in real terms. i draw the following conclusion for the third phase : unconventional monetary policy measures are now widespread in europe and have given central banks slightly more room for manoeuvre. the riksbank and the ecb are operating quantitative easing programmes. the central banks of the czech republic, denmark, sweden and switzerland are prepared to intervene in the foreign exchange market as necessary. and finally, danmarks nationalbank, the ecb, the riksbank and the snb have all introduced negative interest rates. 10 what kind of impact have negative rates had from a monetary policy perspective? as hoped, they have contributed to reducing upward pressure in the neighbouring countries of the euro area. however, corporate financing conditions have not significantly improved, unlike with a conventional reduction in interest rates, and mortgage rates have even risen in some cases. the cost / benefit ratio of unconventional monetary policy instruments must be continually reassessed. if an instrument is no longer having the desired effect after a change in prevailing conditions, monetary policy should be adjusted accordingly. in this regard, it is of central importance that not only the short - term costs and benefits are analysed, but also the long - term consequences. overall, those euro area neighbours with an independent monetary policy have thus far emerged from the crisis in reasonably good shape ( cf. chart 17 ). gdp in switzerland and sweden is currently