The Money Market Event is the biggest feast of the Swiss National Bank and a selected list of money managers that work together with the central bank. It is initiated by important speeches and ended with a generous buffet dinner. In the first speech, Andrea Mächler addressed three points:
The expansion of the SNB balances sheet as measure against the so-called “strong franc” in a historic perspective.
How the SNB takes over currency risks from the private sector.
Details on the balance sheet expansion: Which kind of assets and liabilities does the SNB possess?My annotations are marked in bracket [ and ].

Welcome to the SNB’s traditional Money Market Event in Zurich. I am delighted that so many of you have responded to our invitation. A year ago, you were welcomed here by Fritz Zurbrügg, my colleague in the Governing Board and predecessor as the Head of Department III. It was only a few weeks after the minimum exchange rate had been discontinued, and monetary policy was the hottest topic in town.

This year, I will focus on the Swiss National Bank’s investment policy. In the past few years, the SNB has become a big asset manager. Consequently, I want to look at two questions today.

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Andréa M. Maechler, Member of the Governing Board of the Swiss National Bank

Money Market Event, Geneva, 19.11.2015

Complete text

Since the discontinuation of the minimum exchange rate on 15 January 2015, the monetary policy of the Swiss National Bank (SNB) has been based on two complementary and mutually reinforcing pillars: the negative interest rate and the willingness of the SNB to intervene on the foreign exchange market. The negative interest rate, which applies to sight deposits held by banks and other financial market participants at the SNB, is not a conventional monetary policy instrument. It is a consequence of the fragile international environment and its exceptionally low interest rates. This measure has enabled the SNB to restore the traditional interest rate differential with other countries. The willingness to intervene in the foreign exchange market takes effect when there is a sudden increase in risk aversion among Swiss and foreign investors as a result of high uncertainty and volatile markets, leading to a rise in demand for Swiss francs. This was the case, for example, with the events that unfolded this summer in Greece. Both the willingness to intervene and the negative interest rate help to counter the upward pressure on the Swiss franc. At current values, the Swiss franc remains significantly overvalued.