are low relative to other jurisdictions, even taking account of the current sizeable fiscal stimulus. the https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 09 - 22. html 10 / 13 22 / 09 / 2020 the australian economy and monetary policy | speeches | rba increase in debt is definitely manageable. moreover, there is not, in my judgement, a trade - off between debt and supporting the australian economy in the current circumstance. absent the fiscal stimulus, the economy would be significantly weaker and debt levels even higher. this is particularly so with interest rates at their historically low levels, where the growth benefit from the fiscal stimulus will improve the debt dynamics and help service the debt in the future. foreign exchange intervention is another potential policy option. however, with the australian dollar broadly aligned with its fundamentals, it is not clear this would be effective in the current circumstances. the swiss experience over the past decade ( ahead of the introduction of the ceiling on the swiss franc ) illustrates the issues that can arise in terms of the effectiveness of foreign exchange intervention when a currency is not far from its fundamental value. it is also important to remember that the exchange rate is a relative price. part of the recent movements in the australian dollar reflects the depreciation of the us dollar against other major currencies. it also reflects the high price of iron ore i mentioned earlier. the relatively better growth outcomes in australia compared with other economies shown in graph 1 are having an influence too. that said, a lower exchange rate would definitely be beneficial for the australian economy, so we are continuing to watch developments in the foreign exchange market carefully. a third option is to lower the current structure of rates in the economy a little more without going into negative territory. the remuneration on es balances is currently 10 basis points, the three - year yield target is at 25 basis points and the borrowing rate of the tff is also 25 basis points. it is possible to further reduce these interest rates. a fourth option is negative rates. the governor has talked about this before. [ 11 ] i will just make a few points here. the empirical evidence on negative rates is mixed. [ 12 ] in the short - term, they can contribute to a lower exchange rate. in the medium term, the effectiveness can wane including through the effect on the financial system. negative rates can also encourage more saving as households look to preserve the value of their

light of the fact that, in an international comparison, these two institutions are particularly large relative to the economy, this strengthening is necessary for two reasons. first, the big banks ’ loss potential relative to their capitalisation is substantial. given their significance to the swiss economy, it is important that the big banks remain adequately capitalised, even in the event of such losses occurring. second, while leverage ratios at both swiss big banks have improved by international standards, they are still below the average for large globally active banks. the snb welcomes and supports these reforms. we will continue to be actively involved in the finalisation of the international reforms. the combined package of national and international reforms represents a decisive step in the process of resolving the ‘ too big to fail ’ issue in switzerland. bis central bankers ’ speeches domestically focused banks : adequate resilience, despite substantial increase in mortgage exposure this brings me to the domestically focused banks. for these banks, whose activity centres on swiss lending and deposit - taking business, i would like to highlight three developments. first, these banks ’ risk exposure to the swiss mortgage and residential real estate markets rose markedly in 2015, with their mortgage lending volume growing at a similarly robust pace as in the previous year. in addition, they further increased their affordability risk and interest rate risk exposure from maturity transformation, against a background of slightly higher imbalances on the mortgage and residential real estate markets. second, in 2015, these banks ’ interest rate margins stabilised at a low level, after having fallen steadily and significantly since the start of the low interest rate period at end - 2008. this stabilisation is remarkable, given that pressure on interest rate margins continued last year. swiss money and capital market rates fell once again in 2015. at the same time, the interest paid by banks on customer deposits remained largely unchanged. thus, the difference between these two interest rates – the liability margin – narrowed further. the reduction of the liability margin was offset by an increase in the asset margin, and by taking on greater interest rate risk. third, domestically focused banks were able to maintain their level of resilience compared to the previous year, despite the increased risk exposure. overall, their capitalisation is well above regulatory minimum requirements, and is also adequate according to snb stress tests. the currently available capital surpluses at most banks would be sufficient to cover the losses projected in these stress tests. given the level of prevailing risks, this is positive. however, the risks to