from autumn onwards against the backdrop of the federal reserve ’ s ongoing monetary policy normalisation and the prospect of tax reform ( cf. chart 3 ). as thomas jordan already mentioned, reduced political uncertainty and favourable economic developments in the euro area contributed to the appreciation of the euro. in this environment, the swiss franc has lost some 5 % of its trade - weighted value since mid - year. the depreciation largely occurred over a few days at the end of july, but the downward trend – broad - based across the market and founded on good market quality – continued over the following months. overall, the situation on the foreign exchange market remains fragile, however. despite the positive market environment, the swiss franc has not weakened any further in recent weeks. the risk of renewed swiss franc appreciation remains, particularly if there is a return to risk aversion in the market. a look at the option markets shows that investors are still prepared to pay a higher premium to hedge against swiss franc appreciation than against its depreciation ( cf. chart 4 ). progress made in reforming reference interest rates let me turn now to reference interest rate reform. the financial conduct authority ( fca ) in the uk announced in july of this year that it would not guarantee the continuation of libor beyond 2021. the reason for this is that the volume of money market transactions underlying libor – unsecured interbank loans – has been low for a number of years. the fca will exercise its power to compel panel banks to take part in the libor panel only until the end of 2021. after that, the possibility of libor disappearing fairly quickly due to the withdrawal of panel banks can no longer be excluded. the period until the end of 2021 should now be used by market participants to ensure an orderly transition from libor. as one of the key global reference interest rates, libor continues to be used in a wide variety of credit agreements and derivatives contracts. the libor - based interest rate swap curve ( ‘ swap curve ’ ) plays a particularly important role. interest rate swaps are derivatives transactions involving the exchange of long - term, fixed - rate and short - term, variable - rate interest payments. the variable interest rates are usually linked to libor. these swap contracts can involve maturities of several years or decades. the swap curve thus extends over the full maturity spectrum of financial transactions. in switzerland too, libor – the swiss franc libor, to be specific –

of money held by households and companies, remained strong. this growth in money was accompanied by robust lending on the part of banks. although the rate of growth of mortgage loans to households has declined since mid - 2012, it is still at a high level. most recently, mortgage lending to companies, in particular in residential construction, has increased significantly. overall, lending has been growing faster than nominal gdp for several years. in addition, prices for owner - occupied apartments and single - family homes have risen strongly in the past few years. given the sustained period of exceptionally low interest rates, there is a risk that the imbalances on the mortgage and real estate markets will increase further. this development jeopardises financial stability and, in the event of an abrupt correction, can have wide - reaching consequences for the real economy. snb monetary policy ladies and gentlemen, the snb continues to face major challenges. in particular, the threat that the swiss franc could suddenly come under upward pressure again has not been averted. in the current low interest rate environment, therefore, the minimum exchange rate remains the focal instrument for ensuring appropriate monetary conditions. the financial crisis has shown that for balanced economic development more than just price stability is required ; financial stability must also be guaranteed. in switzerland, the fact that the snb is required to contribute to ensuring financial stability was already laid down in the national bank act of 2004. our annual financial stability report is an important instrument in this respect. it draws attention to emerging imbalances and the existence of risks which, in our view, could jeopardise the stability of the banking industry as a whole in the medium term. in addition, last year a new instrument was created – the countercyclical capital buffer – based on the lessons drawn from the financial crisis. at the beginning of the year, the snb proposed that this buffer be activated, and the federal council decided in favour of an activation in february. the countercyclical capital buffer will come into effect from the end of september 2013 and will strengthen the resilience of the banking industry. moreover, it will help to counter a further build - up of imbalances on the mortgage and real estate markets. my colleague, jean - pierre danthine, will now give you our assessment of the risks in the financial sector. bis central bankers ’ speeches