explain developments in the financial markets and the monetary aggregates. two topics merit particular attention : the development of credit and money supply and the exchange rate. in addition to long - term interest rates and exchange rates, loans – among other things – play an important role when changes in key interest rates are transmitted to the economy. what information can we derive from the development of lending activity? loans are registering constant growth. mortgage loans, which account for the great majority of all bank loans, have grown at a rate of more than 5 % since 2003. this is a reflection of the clearly expansionary monetary policy at that time. the growth rate of mortgage loans has gradually slowed, however, and is now slightly below 5 %. this is nevertheless still a high growth rate. other loans, however, are witnessing stronger growth and are currently expanding by 6 %. unsecured loans, in particular, are rising substantially. during phases of favourable economic development, there is greater willingness to grant unsecured loans. this was the case in 1999, when the economy found itself in a similarly robust state. there is a long - term correlation between loan volume and the m3 aggregate. loan development typically lags behind the development of money supply. monetary aggregates have grown only moderately for the past three years. the m3 monetary aggregate is currently growing at a modest 2 %, while m1 and m2 are even registering a decline. the measured development of the monetary aggregates suggests a slowdown in lending. the development of the swiss franc attracted considerable attention as it has weakened vis - a - vis the euro since the beginning of the year, although it has firmed against the us dollar. to gauge the effects of exchange rates on the economy, we need to make use of the inflation - adjusted exchange rate that is also weighted to take account of the importance of individual trading partners. measured by this real, effective exchange rate, the swiss franc today is at the same level as it was in 2000. in what way do exchange rate developments enter into our decision - making process? the exchange rate is important to the extent that it influences inflation, either directly via the prices of imported goods or indirectly via the business cycle. volatility of the swiss franc against the euro has been negligible as of late. this relative calm should not, however, deceive us. it is not necessarily going to last. experience has shown that phases of a weaker swiss franc can be followed by periods in which the

news conference 15 december 2022, 10. 00 am introductory remarks by martin schlegel i am pleased to give you an assessment of current developments with regard to cash. since june, after many years of strong growth, we have seen a significant decline in banknote circulation. to contextualise this decline of approximately 10 %, let me first say a few words about the above - average growth in recent years. in the period since the 2008 financial crisis, the value of banknotes in circulation grew, on average, more than twice as fast as in the two preceding decades – by around 6 % instead of 2. 5 % per year ( cf. chart 1 ). between mid - 2008 and june 2022, the value of banknotes in circulation more than doubled overall, from around chf 41 billion to chf 91 billion. this sharp increase was driven in particular by the desire of companies and private individuals to hold cash as a store of value. there was particularly strong demand for the large denominations, such as the 1000 - franc and 200 - franc notes ( cf. chart 2 ). we see two reasons for the increased demand for cash as a store of value over the last 15 years or so. first, there were multiple periods of high uncertainty, notably the financial crisis and the coronavirus pandemic. cash tends to be popular as a secure store of value during such times. second, the general decline in interest rates – and negative interest rates in particular – also contributed to the increased demand for cash. when interest rates are low or negative, it is relatively attractive to hold cash ( as opposed to bank deposits, for example ) as a store of value. the increase in interest rates since june has meant that there is once again less of an incentive to hold cash. against this backdrop, the value of banknotes in circulation fell by around chf 10 billion to chf 81 billion between june and october. returns of the 1000 - franc notes in particular were substantial, totalling chf 7. 7 billion. we expect this decline to continue. nevertheless, demand for cash as a store of value is likely to persist. companies and households consider such a safety net to be important. page 1 / 2 berne, 15 december 2022 martin schlegel news conference of course, cash is not only used to store value, but also to make payments. small denominations in particular play an important role here. the decline in banknotes in circulation observed since