If we were to dispense with it, Swiss interest rates would increase compared to those of other countries, Swiss franc investments would be markedly more attractive, and we would  Page 3/6  Berne, 12 December 2019 Thomas Jordan  News conference  have to expect a marked and rapid appreciation in our currency. Inflation would thus fall significantly into negative territory, and the economy would be slowed. But why are interest rates so low in the first place? This is in some part due to the expansionary monetary policy. However, the main reason is that for some time saving has been increasing worldwide, with comparatively little investment being made. The high saving rate is largely attributable to demographics. The dearth of investment is due, among other things, to low productivity gains. Both these factors have been heightened by the prevailing uncertainty since the onset of the financial crisis. If there is more saving and less investment, the interest rate at which the economy is in equilibrium falls. Switzerland cannot distance itself from this global development. Central banks set their policy rates relative to this equilibrium interest rate. To have an expansionary effect, a policy rate must be lower than the equilibrium interest rate. And if the latter is very low, it can be that the policy rate has to be lowered below zero.
Furthermore, most banks will have to meet the next challenge of fine-tuning their risk management and calculating their economic capital in the coming months, pursuant to Pillar 2. In sum, these regulatory, economic and financial factors are prompting banks to change the way they manage their risks, meaning that supervisors must be more flexible and more watchful. To clarify these considerations, I would like briefly to address two issues: 1. The results posted by French banks in 2006 are good, but they are not without vulnerabilities. 2. French banks are currently in the final straight as regards the implementation of the new regulation. As the banking supervisor, our role is to support them during this transitional period and to ensure together that the reforms are carried out properly. French banks’ 2006 results are good, but not without vulnerabilities Like the majority of leading European banks, French credit institutions reported good results for 2006, in line with the previous three years. For the three main banking groups under IFRS, the net banking income grew nearly 19 per cent, more than in 2005. In all, the aggregate net income of the French  BIS Review 75/2007  1  banking system, under French GAAPS, amounts to nearly € billion. This reflects a substantial contribution from foreign subsidiaries and from non-banking business, especially insurance. Moreover, most large French banks made major acquisitions outside their home market in 2006, particularly in regions with strong growth potential.