in order to keep pace with the ecb ’ s monetary policy easing ( cf. chart 12 ). 4 the negative interest rate affected the entire banking system, and danmarks nationalbank found itself in uncharted monetary policy terrain. 5 the introduction of negative interest in denmark showed that moderately negative deposit rates are a viable monetary policy instrument. concerns that lowering interest rates into negative territory could potentially precipitate a flight to cash had previously dissuaded central banks from using this measure. when interest must be paid on bank deposits or money market instruments, holding cash in a vault may appear more advantageous. however, this too entails high risk, and, in the case of large sums, sizeable costs in terms of logistics, storage and insurance. such costs can outweigh those of moderately negative interest rates ; in denmark, a flight to cash did not take place. what is my interim conclusion for this second phase? once the interest rate instrument had come up against its limits, the euro crisis forced central banks in neighbouring countries to deploy unconventional measures. in doing so, these central banks were able to regain a certain room for manoeuvre in influencing monetary conditions. at the same time, they had crossed into uncharted monetary policy terrain, since practical experience of calibrating these unconventional measures and of gauging their effects was still limited in comparison to that of the conventional interest rate instrument. this second phase shows that unconventional measures can have a role to play in influencing monetary conditions. distortions in a currency ’ s valuation, in particular, can justify interventions on foreign exchange markets – even in an environment of floating exchange rates. with regard to the interest rate instrument, it has become apparent that the room for manoeuvre in monetary policy is larger than previously assumed, and that interest rates can be lowered into negative territory. the fear that the introduction of negative interest will precipitate a flight to cash has thus far proved unfounded. chart 12 shows the deposit rates of switzerland, denmark and the euro area. for the czech republic, the discount rate is used, and for sweden, the repo rate minus 10 basis points. in sweden, this interest rate is available to the banking system within the context of fine - tuning operations by the riksbank. in switzerland, the federal council introduced negative interest for foreign account holders in the 1970s. for details, cf. bernholz, peter ( 2007 ), from 1945 to 1982 : the transition from inward

set out in king iii, in more detail. as discussed at the 2010 ( ogm ), the bank has conducted a bankwide gap analysis, and steps are being taken to address those areas we regard as having room for improvement. it is necessary to emphasise that king iii is a voluntary code, and a tool for enhancing governance, which is the approach the bank has taken. question 8 – definition of corporate body a request has been made to set out clearly the definition and status of the bank with regard to profitability. the sarb act clearly stipulates that the bank is a juristic person, with its primary objective being to protect the value of the currency of the republic in the interest of balanced and sustainable economic growth. there should be no ambiguity about this matter. the bank does not perform its duties with a profit motive. on the contrary, in the exercise of its responsibilities, it may well take actions that are in the national interest but will result in the bank being loss - making. it is the obligation of the bank to act in the best interests of the country, and not in the narrow interests of the profitability of the bank or its shareholders. there are legal limits placed on the rights of the shareholders of the bank – for instance a limit of 10, 000 shares, a fixed dividend, the election of only some of the non - executive board members and no role in the appointment of the governor and deputy governors, among others. amendments to the sarb act the amendments to the sarb act were promulgated in september 2010. in terms of these amendments, membership of the board of the bank was expanded from 14 to 15. the board has also agreed to use as a guideline the nine - year rule contained in king iii for the service periods of board members. as a result, three new non - executive directors will be elected by shareholders at this ogm. there are currently four vacancies for non - executive directors appointed by government. once all these appointments have been made, the board will comprise a significant proportion of new members. while this may raise challenges for bis central bankers ’ speeches continuity, i am confident that the new - look board will continue to maintain effective corporate governance oversight of the bank. other changes to the board have come about as a result of the appointment of mr lesetja kganyago as deputy governor, who assumed office on 16 may 2011. i would like to take this opportunity to welcome him again to the bank