annual rate of more than 3 %. however, this general figure is composed of a number of different movements in opposite directions. mortgage lending has been increasing more and more rapidly since november. the growth rate rose from 3. 6 % in december to 4. 2 % in april, an advance related to the fall in the libor. other credits for all currencies, by contrast, began falling in april ( – 0. 8 % ), as might be expected in this phase of the economic cycle. other credits granted in swiss francs, however, continued growing at a rate of 1. 2 %, despite the fact that they were already at a relatively high level. loans granted to private companies grew at a rate of 10. 2 % in the first quarter of 2009 as compared to the first quarter of 2008. thus, we do not perceive the slightest indication of any credit crunch in switzerland. clearly, with the decline in the quality of certain borrowers during a recession, it is inevitable that a cyclical tightening of loan conditions will occur, but this cannot be termed a credit crunch. this statistical information is confirmed by the quarterly survey on lending conditions which the snb has been conducting with the 20 most important swiss banks since the beginning of 2008. the survey shows that a third of the banks questioned tightened their lending conditions slightly. this proportion is a little higher for loans granted to large companies than those granted to small and medium - sized companies. to summarise, the situation on the bank lending market remains relatively relaxed and clearly better than that in the us or in the euro area. nonetheless, deterioration cannot be ruled out for the future. we now move on to monetary developments. for more than eighteen months now, the demand for liquidity on the interbank market has increased substantially and – as i mentioned before – the loss of trust among banks has brought the market to a standstill. the snb has been forced to take the place of the lending banks and provide the market with generous amounts of liquidity through a major expansion of its repo lending. moreover, additional liquidity has been created by purchasing foreign currency on exchange rate markets and bonds issued by private sector borrowers, and by making swiss franc funding available through swap arrangements with the european central bank and with the central banks of poland and hungary. consequently, in may, the monetary base was up by 132 % within the space of one year and now amounts to chf 105 billion. the medium and longterm inflation

jean - pierre roth : recent economic and financial developments in switzerland introductory remarks by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the half yearly media news conference, berne, 18 june 2009. * * * since the beginning of the financial crisis in august 2007, our monetary policy has passed through three distinct stages. in the first stage, as the interbank market gradually dried up, we sought to protect the swiss economy from a deterioration in conditions on the credit market. from the start of the crisis, we countered the forces pushing the level of the three - month libor up by undertaking appropriate reductions in the repo rate. between september 2007 and september 2008, we were able to stabilise the libor at 2. 75 %. thus we protected our economy from a rise in interest rates resulting from the increase in risk premia on the money market. since we were confident that the economic downturn would have a moderating effect on prices, we refrained from adopting a more restrictive monetary policy, despite the fact that soaring oil prices caused inflation to rise and risked destabilising inflation expectations. the second stage began in autumn 2008 with the emergence of the first indications of a swift downturn in the economy and the sharp deterioration in the financial crisis after the collapse of lehman brothers investment bank. we rapidly relaxed our monetary policy by bringing down our libor target by 225 basis points to a level of about 0. 5 % within three months. at the same time, we had been charged with stabilising the financial sector, committing ourselves to take over a large portfolio of illiquid ubs assets. in addition, we concluded euro versus swiss franc swap arrangements with the european central bank and the central banks of poland and hungary, to ease refinancing of banks that had granted mortgage loans in swiss francs in these two countries. these swaps made it possible to counteract the rise in the libor generated by an additional demand for swiss francs outside our normal field of operation. the third stage began in march 2009. by then, price stability was threatened, not by the temporary inflationary escalation of 2008, but quite the opposite – the risk of a fall in prices over the coming three years. since, by that time, our room for manoeuvre in the area of interest rates was limited, we decided to turn to unconventional instruments in order to bring about a further relaxation in monetary conditions. how has the economic