stance so the challenge we face is how to deliver the necessary policy stance. since the start of the pandemic, monetary policy in the euro area has gone through three phases. in the first phase – the phase of fragmentation – the flexibility of our pandemic emergency purchase programme ( pepp ) [ 10 ] averted an unjustified widening of spreads which would have disrupted monetary policy transmission. as a result, speculators stopped using short positions on particular euro area sovereigns as a way of expressing their negative views on the global economy. in the second phase, the pepp increasingly became a tool for steering the overall monetary policy stance. its size and duration became the key parameters for loosening financing conditions and pushing down the euro area yield curve to the low levels observed last december. in parallel, our targeted longer - term refinancing operations ( tltros ) successfully pinned down bank lending rates to some of the lowest levels on record. we have now entered a third phase, in which we need to preserve accommodative financing conditions to support the recovery and the convergence of inflation to our aim. this essentially means more focus on 10 / 19 anchoring key financial variables – above all, lending rates and the yield curve – as key indicators of the monetary policy stance. this approach should progressively add accommodation because, as actual and expected inflation pick up, anchoring nominal yields allows real yields to fall. and there should be no doubt that lower real yields would provide welcome additional stimulus, given how far we are from full capacity and the subdued level of current and expected inflation. implementing such a policy requires the central bank to broadly identify what level of nominal yields it is aiming to achieve ; to tailor its purchases to achieve that level ; and to be ready to intervene to the extent necessary. in december, when we recalibrated the pepp, the governing council determined that the financing conditions prevailing at that time were favourable. so, that constellation of financing conditions should be seen as the reference point for our policy moving forward. by that metric, the steepening in the nominal gdp - weighted yield curve we have been seeing is unwelcome and must be resisted. amid the increase in market yields ( chart 5 ) [ 12 ], president lagarde recently stated that “ the ecb is closely monitoring the evolution of longer - term nominal bond yields. ” [ 13 ] in the past week, euro area yields across the maturity spectrum, including risk - free rates,

situation in switzerland was made even more difficult by the fact that, as a result of the minimum exchange rate, both the swiss franc and the euro lost value against the us dollar and the pound sterling. this put the broad overvaluation of the swiss franc that had led to the introduction of the minimum exchange rate into perspective. both of these factors, i. e. the disappearance of the interest rate differential and the reduction of the overvaluation, finally led to rapidly increasing pressure on the minimum exchange rate. at the beginning of 2015, it became clear that the minimum exchange rate of chf 1. 20 per euro was no longer sustainable from a monetary policy perspective, and would require everlarger foreign currency purchases to enforce it. if the snb had ignored the changing reality and attempted to maintain the minimum exchange rate, the extensive interventions would have led to the bank losing control over its balance sheet and thus over longer - term monetary conditions in switzerland. putting this decision off would also not have helped the economy. the minimum exchange rate was introduced as an instrument against widespread and extremely pronounced swiss franc strength. in this new phase of general euro weakness, it was no longer the right tool. the conditions which existed when it was introduced in 2011 had fundamentally changed. on 15 january 2015, the snb therefore decided to discontinue the minimum exchange rate and to impose an interest rate of – 0. 75 % on sight deposits held by banks at the snb. with this negative interest rate, the interest rate differential to the euro area was at least partially restored. at the same time, the snb announced that it would continue to intervene on the foreign exchange market if necessary. by implementing both of these measures, the snb ’ s aim was and remains to reduce the upward pressure on the swiss franc. immediately after the minimum exchange rate was discontinued, the swiss franc appreciated abruptly against the euro before weakening again somewhat. the swiss franc saw the same appreciation that the us dollar and the pound sterling had already experienced. due to switzerland ’ s close trade links with the euro area, this appreciation presented the swiss economy with major challenges. the euro area ’ s neighbours reacted to the ecb ’ s monetary policy measures in varying ways. denmark lowered its deposit rate to – 0. 75 % in january 2015 and intervened in the foreign exchange market. 9 sweden introduced a negative interest rate in february 2015, although the relevant deposit rate currently stands at – 0. 60 %.