Fritz Zurbrügg: Negative interest rates: necessary from a monetary policy perspective - but with what risks for the banks?

Speech by Mr Fritz Zurbrügg, Vice Chairman of the Governing Board of the Swiss National Bank, to the Volkswirtschaftliche Gesellschaft des Kantons Bern, Berne, 24 November 2016.

Ladies and gentlemen

Thank you for inviting me to speak at your annual general meeting. It has become something of a tradition for members of the Governing Board of the Swiss National Bank to appear before your society, the Volkswirtschaftliche Gesellschaft des Kantons Bern, and I am honoured to continue this tradition. In November 2012, my colleague Thomas Jordan began his speech by citing a few figures to underline just how much the world had changed since the financial crisis. The Swiss franc exchange rate to the euro had fallen from 1.65 to 1.20, shortterm interest rates had decreased from 2.5% to almost zero, and the yield on ten-year Confederation bonds was just 0.5%. Who would have thought that, four years later, we would be confronted with an even stronger franc and even lower - indeed negative - short and longterm interest rates?