SNB Speeches

2013-04-26 - Jean Studer - The dual challenges of 2012

2013-04-26T10:00:00+02:00

2013-04-26 - Thomas Jordan - Speech at the General Meeting of Shareholders

2013-04-26T10:00:00+02:00

2013-04-16 - Jean-Pierre Danthine - Credit - is the sky the limit?

2013-04-17T10:59:38.937+02:00

Over the past few years, the growth of credit volumes has been significant, with the result that credit volumes relative to gross domestic product (GDP) have reached new historical peaks in Switzerland. Together with persistently increasing real estate prices, this spells out conditions that may lead to subsequent financial instability. How can we understand these recent developments in credit volumes? And can this understanding form a basis for predicting the likely future evolution of this variable in Switzerland?

Clearly the credit-to-GDP ratio cannot grow indefinitely because otherwise the cost of servicing of the debt would end up exhausting the whole of GDP. The recent development must therefore either be viewed as a structural adjustment to a new plateau, or as a cyclical upswing to be followed by a later correction.

Although structural factors can possibly explain a high level of credit-to-GDP in Switzerland in international comparison, they are unlikely to rationalize the most recent upward move in this ratio. By contrast, cyclical drivers appear highly plausible in the current circumstances. Specifically, the long period of ultra-low interest rates feeding into and being reinforced by rising real estate prices, combined with the potential for some behavioral biases, have a higher explanatory power.

The lessons from this analysis are crystal clear. The recent developments in the credit market translate for the Swiss economy into a state of high vulnerability requiring caution and the exercise of responsibility by all concerned. The activation of the countercyclical capital buffer and the adoption of other prudential measures have to be seen in this perspective.

2013-03-21 - Dewet Moser - Implementation and impact of monetary policy

2013-03-21T18:00:00+02:00

Last year, the deterioration in the euro crisis prompted a flight from the euro to other currencies. At certain times, it also resulted in a very substantial demand for Swiss francs. To meet this demand and thereby enforce the minimum exchange rate, the Swiss National Bank (SNB) has created a lot of permanent liquidity through foreign currency purchases. Consequently, the SNB has not concluded any more transactions with temporary liquidity since mid-2012. The exceptionally low level of interest rates is an additional factor in the slowdown of activity on the money market. However, the SNB continues to bear responsibility for the Swiss franc money market. First, it still attaches great importance to reliable and representative reference rates for the money market. It works to promote them, verbally and actively, even under difficult conditions. Second, together with different players, it is working toward finding a solution for the money market infrastructure that is workable for the future. Such a structure is an important element in an efficient and competitive Swiss financial centre.

The currency purchases went hand in hand with a steep rise in the SNB's foreign currency investments. They were diversified prudently and in a market-sensitive manner, as well as possible, over time, not least with the currency breakdown in mind.

With interest rates close to zero, appropriate monetary conditions are closely tied to exchange rates. Given this environment, implementation of monetary policy is, for the foreseeable future, geared to securing the minimum exchange rate on the foreign exchange market. To this end, the SNB has further reinforced its operational planning last year.

2013-03-21 - Fritz Zurbrügg - The financial crisis in its sixth year: an end in sight?

2013-03-21T18:00:00+02:00

In this, the sixth year of the financial crisis, the situation on the financial markets has eased considerably. Is what we're seeing the prospect of an end to the crisis, or is this just a flash in the pan?

Measures by central banks made a major contribution to stabilising the financial sector. This sector, however, is just a part of the whole, and while its stability is a precondition for sustained global economic growth, it is by no means a guarantee. The positive mood in the financial markets and leading economic indicators raise hopes that a recovery is underway. If these hopes are to be realised, however, structural reforms need to be implemented.

The three most significant challenges for the global economy are increasing the resilience of the financial sector, improving the flexibility of labour and goods markets (especially in Europe), and consolidating the public finances of the advanced economies. Progress has been made in all three areas. The way ahead, however, is still both long and difficult. Due to the relatively lengthy period of weak growth, there is considerable danger that reform fatigue might spread in those countries most severely affected. It is therefore that much more important that the reforms are well-planned and credible, and that they are implemented consistently, but also prudently. There is also the threat that pressure will build on central banks to compensate a failure to reform with monetary policy measures.

Central banks can and must resist this pressure, in order that they can continue to focus on ensuring price stability. Governments, on the other hand, should embrace this deep crisis as an opportunity to implement urgently needed structural reforms. Only then will we be able to say, with certainty, that the end of the financial crisis is in sight.