Andréa M Maechler: Monetary policy implementation - how to steer interest rates in negative territory

Speech by Ms Andréa M Maechler, Member of the Governing Board of the Swiss National Bank, and Mr Thomas Moser, Alternate Member of the Governing Board of the Swiss National Bank, at the Virtual Money Market Event, webcast, 5 November 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen

Good afternoon to all of you. On behalf of my colleague Thomas Moser and myself, I would like to welcome you warmly to the Swiss National Bank's first-ever virtual Money Market Event. I am delighted that we are all able to interact in this way, even though the circumstances which necessitate the virtual format are anything but pleasant. The coronavirus crisis has turned the lives of billions of people upside down. Many have contracted or even died from the disease, and many others have lost their jobs as a result of it. Given all of this, the fact that the SNB has been forced to break with an almost twenty-year tradition and refrain from holding a physical Money Market Event is little more than a side-note. But it is regrettable all the same.

The coronavirus crisis generated significant turbulence in financial markets when it surfaced in February and March. The leading central banks eased their monetary policy stance, and many made use of the standing US dollar swap lines to enhance the provision of global US dollar liquidity. Investor sentiment improved substantially beginning in late March on the back of large-scale fiscal and monetary support programmes launched in many countries, including Switzerland. Bolstered by these programmes and the eventual relaxation of public health policy restrictions, financial markets continued their recovery until late summer, and economic activity also picked up considerably. However, developments in recent days and weeks have made it clear that the coronavirus crisis is not over and that uncertainty remains high.

In Switzerland, the SNB has repeatedly reaffirmed its expansionary monetary policy. In so doing, it has made an important contribution in terms of immediate crisis management.