categories and currencies. for a considerable period, the snb has held not just the traditional instruments – government bonds of countries with high credit ratings – but also bonds issued by private sector borrowers and shares. holdings of shares currently make up some 10 % of foreign currency investments. in order to diversify its investments further, in 2010, the snb included additional currencies such as the australian and singapore dollars as well as the swedish krona and danish krone in its investment universe. since the first quarter of 2012, the snb has also been investing in the korean won. additional investment opportunities in the advanced and emerging economies are continually being evaluated, both for bonds and for shares, although this is subject to an adequate level of liquidity in the markets in question. bis central bankers ’ speeches the idea of a sovereign wealth fund may appear attractive at first glance. however, in the current situation, it does little to assist switzerland or swiss monetary policy. the sovereign wealth funds in norway and the oil states cannot serve as models for the management of the snb ’ s currency reserves. all of them invest state income surplus derived from commodity exports. a swiss sovereign wealth fund funded from snb foreign exchange, by contrast, would be financed through money creation. from our point of view, the three following points, in particular, speak against a sovereign wealth fund. first, the creation of such a fund would not help to enforce the minimum exchange rate. the only decisive factor is the snb ’ s willingness to buy foreign currency in unlimited quantities against swiss francs. second, all investments abroad are subject to an exchange rate risk, whether they be government bonds, shares, real estate, commodities or investments in infrastructure, and irrespective of whether they appear on the snb balance sheet or on that of a separate sovereign wealth fund. consequently, outsourcing the foreign currency investments would not reduce switzerland ’ s exchange rate risk. third, outsourcing the foreign exchange to a sovereign wealth fund would call into question the independence of monetary policy and the snb, as well as the freedom of action for monetary policy. the size and composition of the snb ’ s balance sheet are a reflection of monetary policy. the snb must also be in a position to dispose of the assets it has purchased and determine the composition of its balance sheet as required. only in this way can it conduct an independent and target - oriented monetary policy. bis central bankers ’ speeches

a significant slowdown in gdp growth. since the global economy is expected to recover slowly, and the value of the swiss franc is still high, the demand for exports is likely to remain subdued, even in the subsequent period. the high level of uncertainty and the pressure on profit margins are impacting negatively on corporate investment. only because of the unexpectedly strong winter half - year does the snb now expect growth of around 1. 5 % for 2012. swiss inflation outlook the inflation outlook for switzerland has remained largely unchanged from the monetary policy assessment in march. since the fourth quarter of 2011, the annual inflation rate has been in negative territory. this is mainly attributable to a base effect, because last quarter the price level remained almost unchanged from the previous quarter. thus the minimum exchange rate has put a halt to the deflationary situation that had arisen as a result of the strong appreciation of the swiss franc last summer. surveys on inflation expectations confirm that deflation is not expected at present. as the surveys also show, there continues to be no danger of inflation. this corresponds to our conditional inflation forecast which reaches 0. 8 % at the end of the three - year forecast horizon. overall, the path of inflation is again more subdued than in the march forecast, due to the fact that the swiss franc is weakening less rapidly than was forecast at that time. monetary and financial conditions let us now turn to monetary and financial conditions. these are virtually unchanged from the first quarter of 2012. after the march monetary policy assessment, the euro remained more or less stable against the major currencies. since the beginning of may, it has weakened by around 5 % against the us dollar. as a result, the swiss franc has depreciated slightly in export - weighted terms, even if the exchange rate has remained unchanged with regard to the euro. interest rates in the swiss franc money market continue to fluctuate around zero. in the past quarter, the libor persisted at a very low level, at around 10 basis points. for the foreseeable bis central bankers ’ speeches future, interest rate expectations remain exceptionally low, and levels of interest rates on futures – derived from libor futures contracts – are in fact, in some cases, substantially below zero. yields on bonds with high credit ratings are also very low in switzerland. at the beginning of june, ten - year confederation bonds attained a new all - time low, at around 0. 5 %. thirty