In order to ensure an orderly transition, it is vital that the changeover to SARON on the credit and derivatives markets occur as early as possible. The supply of SARON-based products on the credit market is increasing. For example, various banks have launched SARON-based mortgages in recent months. However, the SARON-based derivatives market is still significantly less liquid than its Liborbased counterpart – turnover on the SARON-based derivatives market remains considerably lower than turnover on the Libor-based market (cf. chart 4). As we do not have a consistently liquid government bond curve in Switzerland, the interest rate swap curve is very important as a reference for pricing fixed-interest loans and bonds. With the discontinuation of Swiss franc Libor, this critical reference function will be performed by the SARON-based interest rate swap curve. It is important that Libor-based contracts that cannot be switched to SARON before the end of 2021 are furnished with robust fallback clauses. The International Swaps and Derivatives Association (ISDA) has recently published such fallback clauses for derivatives contracts. Robust fallback clauses minimise the risks associated with the discontinuation of Swiss franc Libor, thereby providing a safety net. The SNB itself continues to make progress with the changeover to SARON – we will have no outstanding Libor-based derivatives in our investment portfolio by the end of 2021. Moreover, from end-2021, we will exclude all Libor-based floating-rate notes from the list of collateral eligible for SNB repos when implementing monetary policy.
For me today, it means that all current EU member states will contribute as much as they can to these improvements with their own ideas, knowledge and experience. The new ESCB members are prepared to contribute their share. They have gained a wealth of experience from a decade of economic transformation, a decade during which they used a wide variety of monetary policy strategies, from inflation targeting to currency boards, in order to deliver low inflation. Let me mention just a couple of lessons that were learnt: •  how to make decisions and produce good-quality economic forecasts when faced with large uncertainty (eg. about available data)  •  how to bring the economy back to low inflation after a series of supply-side shocks and how efficient communication is crucial in such circumstances  •  and that maintaining low inflation is much easier providing fiscal discipline and policy co-ordination can contribute to the task. These issues will surely be familiar to others. The knowledge gained during the transformation period will enrich the policy debates of the ESCB´s councils and working groups. This is how monetary integration will happen on a day-to-day basis both in countries that already use the euro and in those that will introduce it in the future. 2  BIS Review 70/2004