, interest rates worldwide are now very low or even, in the recent period, negative. consequently, low or negative interest rates are not a purely swiss phenomenon. they are a worldwide trend which switzerland cannot escape. as a small open economy, switzerland is closely linked to other countries through international trading and capital flows. the snb has to take this into account when formulating its monetary policy. traditionally, interest rates in switzerland are lower than in other countries, since switzerland has long had low inflation and is also politically very stable. the swiss economy benefits from this interest rate advantage in the form of low capital costs. this is expressed in a number of ways, including the high quality of infrastructure and high labour productivity. during the financial crisis, interest rates abroad fell more sharply, overall, than in switzerland. consequently, the interest rate differential between investments in foreign currencies and those in swiss francs had declined to almost zero towards the end of last year. this made the swiss franc even more attractive for investors. the swiss franc is equally attractive to both domestic and foreign investors. the upward pressure on the swiss franc is not only due to the fact that foreigners want to invest in the swiss franc, but also because swiss residents invest less abroad or repatriate their international investments. allow me to explain this in more detail. for a long time, switzerland has had a current account surplus, in other words, it exports more goods and services than it imports. in addition, the high level of international investments earns significant investment income. due to the current account surpluses, switzerland has built up considerable foreign assets over time. these asset holdings abroad were largely invested in foreign currencies, partly because of the more attractive returns. 1 the net revenue earned with the current account surpluses has to be “ re - exported ” in the form of foreign securities purchases or investments abroad. in the years before the financial crisis, inflows attributable to the current account surplus were more or less balanced by outflows in the form of private capital exports. following the financial crisis, the situation changed completely. risk appetite in switzerland reduced sharply. investment of the proceeds from the current account surplus abroad by the domestic private sector has become increasingly restrained. moreover, a portion of existing international investments is even being repatriated to switzerland. this has very substantially increased private demand for swiss francs, resulting in upward pressure on the currency. at the end of 2012, switzerland ’ s foreign assets

; since the start of the year alone it has increased by approximately 40 basis points. interest rates, which have reached a relatively lower level in this country, to some extent mitigate the economic burdens associated with the appreciation. they have probably also contributed to the slight recovery of the euro vis - a - vis the swiss franc in the past few days. in the first half of 2002, capital market rates were influenced by economic expectations in the united states. the positive economic data in march triggered a vigorous rise in long - term us interest rates by approximately 50 basis points within a very brief time. with economic indicators below expectations since april, long - term yields fell back to their mid - 2001 level. the expectations reflected in the futures markets concerning the development of money market rates – and therefore also monetary policy – have undergone a marked downward adjustment, notably for the us dollar, but also for the euro and the swiss franc. hopes of a vigorous and rapid economic recovery have given way to a more realistic assessment. the snb as asset manager in the context of its statutory mandate, the national bank manages sizeable assets ( table 1 ). in may 2002, their market value exceeded sfr 100 billion. the free assets ( sfr 21 billion ) are to be withdrawn from the national bank and allocated to other purposes. mr blattner will provide details on the management of the free assets. the monetary assets ( sfr 86 billion ) serve monetary purposes. claims from repo business ( sfr 16 billion ) reflect our money market activities on the assets side of the balance sheet, while swiss franc securities ( sfr 5 billion ) are available for absorption repos if necessary. foreign exchange reserves ( sfr 41 billion ) are at the centre of our activity as asset managers. at the end of 1997, the leeway previously granted solely for money market investments was legally extended. this provided a possibility to spread fixed - interest investments more evenly across various maturities and currencies and to widen the range of instruments. among the currencies ( graph 1 ), the us dollar and the euro predominate with shares of 42 % and 46 % respectively. the maturities of the investments extend over the entire interest rate curve, with the average maturity being around five years. in the debtor categories, government paper predominates, accounting for a share of more than 50 %. the rest comprises claims against international organisations and banks or bank - like borrowers with an above - average