However, the appreciation since 2007 is of an entirely different quality and even the appreciation shocks of the 1970s and 1990s pale in comparison. In particular, it must be borne in mind that the speed of appreciation was particularly high this time around. It is much more difficult to digest a rapid appreciation since it leaves companies with less time to initiate the process of adaptation. Even companies that would normally be in a position to absorb an appreciation and maintain their competitiveness are coming under pressure. Second, it must be emphasised that, on average, the export volume of Swiss products has reacted comparatively little to exchange rate movements. The qualification on average is an important one. In fact, the dependence on exchange rate movements of the two largest sectors in terms of export share (chemicals, including pharmaceutical products, and precision instruments and watches) is distinctly below average. Thus, these sectors’ share of total exports has gone up over time. By contrast, the adjustments some companies and industries have made to the strong franc have been – and still are – so far-reaching that they are having to completely rethink their future in Switzerland. Third, I am aware that it is easy for an outside observer to talk about the advantages of a strong currency. At the same time, the SNB’s various direct contacts with companies allow us to gain concrete insights into current problems.
But the weak recovery of the global economy and persistently high uncertainty since the 2008 financial crisis have meant that these characteristics have become much more pronounced. The Swiss economy is accustomed to dealing with difficult exchange rate conditions, and has demonstrated its versatility time and time again. However, the Swiss franc is particularly overvalued at the moment. The SNB’s current monetary policy reflects this challenging environment. The negative interest rate on sight deposits, together with the willingness to intervene on the foreign exchange market as necessary, make it less attractive to hold Swiss francs and thereby support a further weakening of the currency. At the same time, the SNB continues to monitor carefully the effects of low interest rates on financial stability. 6  BIS central bankers’ speeches  Charts Chart 1  Chart 2  BIS central bankers’ speeches  7  Chart 3  Chart 4  8  BIS central bankers’ speeches  Chart 5  Chart 6  BIS central bankers’ speeches  9  Charts 7a und 7b  Charts 8a und 8b  10  BIS central bankers’ speeches