andrea m maechler : investment policy in times of high foreign exchange reserves speech by ms andrea m maechler, member of the governing board of the swiss national bank, at the money market event, zurich, 31 march 2016. * * * the accompanying charts can also be found on the swiss national bank ’ website. the speaker would like to thank dirk faltin and marco huwiler for their support in drafting this speech. she also extends thanks to sophie faber, peter kuster, sandro streit, jonas stulz and martin weder for helpful comments, to the snb language services, and to adrian avdyli for preparing the data. welcome to the snb ’ s traditional money market event in zurich. i am delighted that so many of you have responded to our invitation. a year ago, you were welcomed here by fritz zurbrugg, my colleague in the governing board and predecessor as the head of department iii. it was only a few weeks after the minimum exchange rate had been discontinued, and monetary policy was the hottest topic in town. this year, i will focus on the swiss national bank ’ s investment policy. in the past few years, the snb has become a big asset manager. consequently, i want to look at two questions today. first, what are the reasons for the significant increase in our foreign currency investments? second, how does the snb handle these foreign currency investments? however, i can ’ t leave monetary policy out completely. i will thus comment on our current monetary policy at the end of my speech. balance sheet expands due to measures against strong swiss franc in the past few years, the snb ’ s balance sheet total has risen sharply. since the onset of the global financial crisis in 2008, it has multiplied by a factor of six. at the end of last year, it came to around chf 640 billion, or almost exactly the value added by the swiss economy in 2015. the growth in the balance sheet total is attributable to a rise in swiss franc liquidity and an expansion of our foreign currency investments. this brings me to my first question : how did the increase in foreign currency investments come about? the short answer is that it is the result of monetary policy measures which the snb takes to maintain appropriate monetary conditions in switzerland. thus, foreign exchange market interventions, which the snb has been using to counter the appreciation of the swiss franc since spring 2009, have led

topics will be discussed, such as the assessment of financial education initiatives and education to ensure the proper use of financial products and services through digital channels. i would like to underline that one of the greatest assets of sharing our experiences at these meetings is the diversity of approaches. though we pursue a common goal, to increase people ’ s financial literacy and inclusion levels and ultimately their well - being, the path to reach that goal may – and certainly will – differ. therefore, it is important for us all to learn about different approaches, take advantage of the diversity of experiences and adapt them to each country ’ s 1 / 3 bis central bankers'speeches economic, financial and institutional background. the debate on these topics is quite stimulating on account of their complexity, but there is also an especially gratifying side to it because we know how these initiatives can improve the lives of real people. these would be more than enough reasons to look forward to two excellent days working together and sharing. but there is another reason that makes it even more pleasurable : we will do so in portuguese, a language that instantly brings us closer and reminds us that our countries are players in a global world that is also expressed and felt in the rich variations of a language shared by us all. 3. financial inclusion is an essential component of social inclusion, since it leads to a more efficient management of personal finances, and gives people conditions to manage a family budget better, use of payment means more efficiently, make savings using adequate products and be safer when applying for a loan. in fact, one must not forget that financial inclusion also helps fight inequality, a paramount issue in today ’ s economies. mario draghi, president of the european central bank, underlined a few days ago when he met with students at a university in lisbon that inequality is a highly destabilising phenomenon for all areas of society, including financial stability. traditionally, major barriers to financial inclusion are connected to geographical proximity factors, such as low density of credit institutions making it difficult to access the formal financial sector. these barriers lead to the existence of an informal sector that provides competing financial products and services, which though unregulated are more easily accessible. other exclusion factors are high costs of financial services in the formal sector or the credit institutions ’ failure to offer products that meet the needs of consumers with low income / low levels of education. yet, the fact that financial services are increasingly digital brings about new opportunities for promoting financial inclusion, overcoming some of these obstacles