chf 1. 20, and at times, values were recorded which were last seen in spring 2011, in other words, before the introduction of the minimum exchange rate. on a trade - weighted basis, however, the swiss franc has remained largely unchanged since the beginning of the year. the favourable developments on the financial markets, which have persisted over a lengthy period, were the result of a reduction in extreme risks. this was due, on the one hand, to measures taken by the ecb, and on the other, to the fact that, in the us, the ‘ fiscal cliff ’ was averted. as recent weeks have shown, conditions on the financial markets can change again swiftly. in japan, there has been a sharp correction on the stock market and the yen has again gained somewhat in value. meanwhile, in the euro area, there is a discrepancy between the generally favourable trend on the financial markets and the disappointing economic data. finally, in the us, a certain degree of uncertainty about the future monetary policy direction of the federal reserve ( fed ) has gained ground. overall, the market bis central bankers ’ speeches environment continues to be dominated by high levels of uncertainty, thereby remaining susceptible to sudden shifts in mood. management of currency reserves the easing of tensions on the financial markets also affected the swiss national bank ’ s ( snb ) currency reserves. these are mainly composed of foreign currency investments and gold. at the end of may, the snb held foreign currency investments of just over chf 440 billion ( cf. chart 1 ). due to our liquidity and security requirements, a large portion of our foreign exchange holdings are in government bonds and deposits with other central banks. this portion amounted to 78 % at the end of the first quarter of 2013. to further diversify investment risk and increase investment in real assets, we raised our proportion of equities from 12 % to 15 % in the first quarter. we currently hold equities worth around chf 65 billion, which is three times more than at the end of 2011. in this regard, we have widened our scope to include shares of companies with relatively small market capitalisation, as well as those in advanced economies not previously considered, with the result that our equity portfolio now covers all advanced economies. since we have invested relatively little in these new markets, our currency allocation has hardly changed in recent months. the proportion of gold in the currency reserves amounted to 10 % at the end of the first quarter

the legislation says, i probably never was. i always worked with others to make the final decision. this is now formalised and i value the insights that all members of the mpc bring to their important role. that was phase 1 of the review. phase 2 is looking at the reserve bank ’ s financial stability function. the process started last year and will run through until the middle of next year, when legislation is due to be introduced to the house. it will continue beyond that, as there will be more detail to work out and implementation to be planned. after the first round of consultation, the government has made a series of in - principle decisions. we will continue to be a “ full service ” central bank the government has decided to keep responsibility for prudential regulation with the reserve bank. this makes sense given new zealand ’ s size. however, this regulatory model is not just about being cost - effective. in our story of the reserve bank as the tane mahuta of new zealand ’ s financial system, our money and foreign reserves are the sap, and our payment and settlement systems allow money to flow round the system, and support our regulated financial institutions – our grafted branches. keeping prudential regulation and supervision in the same institution as monetary policy, currency issuance, our payment and settlements systems and our markets functions, means we maximise the synergies between the different areas. as a full service central bank we can leverage our different tools and market functions and adapt our response as circumstances dictate. we are reviewing the production and movement of our money through the ‘ future of cash ’ project6 – te moni anamata – to make sure that new zealanders, the financial system and the reserve bank are ready and resilient to changing uses and demands for cash. we see a ‘ less cash ’ not ‘ cashless ’ society evolving rapidly. why not cashless? there are many reasons, in particular financial inclusion and business continuity, that cash plays an important role in promoting. new rbnz monetary policy committee remit reiterates focus on price stability and employment what's the future for cash in new zealand? ref # 8108464 v6. 6 we are also renewing our payment and settlements systems to enhance their reliability and security and better meet our customers ’ needs. banking the banks is a 24 / 7 task globally, and we must ensure the highest of operational standards. we are already increasing our capability to deliver effective pr