The subdued developments in money and loan growth continue to support the assessment that the underlying pace of monetary expansion is moderate and that inflationary pressures over the medium term are contained. The downward impact of the steep yield curve on monetary growth, which is reflected in the allocation of funds into longer-term deposits and securities outside M3, is gradually waning. Moreover, the impact of the narrow spreads between different short-term interest rates on the growth of the components of M3 is continuing to diminish. As a result, the annual growth  2  BIS Review 113/2010  rate of M1 has continued to moderate from high levels, and stood at 8.1% in July 2010, while the annual growth rate of other short-term deposits has become less negative. The still weak annual growth rate of bank loans to the non-financial private sector continues to conceal positive growth in loans to households and diminishing negative annual growth in loans to non-financial corporations. These developments are consistent with a normal, lagged response of loan developments to economic activity over the business cycle. Given the subdued developments in banks’ overall balance sheets, the challenge remains for banks to expand the availability of credit to the non-financial sector when demand picks up. Where necessary, to address this challenge, banks should retain earnings, turn to the market to strengthen further their capital bases or take full advantage of government support measures for recapitalisation. To sum up, the current key ECB interest rates remain appropriate.
News conference  Berne, 12 December 2019 Fritz Zurbrügg  Introductory remarks by Fritz Zurbrügg  In my remarks today, I will begin with the current assessment of the situation at the big banks and domestically focused banks. I will then go on to discuss the significance of climate change for financial stability. The final part of my speech will focus on the issuance of the new banknote series, which was completed in September. Big banks  I will start with the situation at the big banks. Both Credit Suisse and UBS have made significant progress since the ‘too big to fail’ regulations were introduced almost ten years ago. They have strengthened their capital bases, reduced their risk positions and implemented key organisational measures as regards crisis management.. With respect to resilience, Credit Suisse and UBS have already achieved their targets. Both banks have increased their regulatory capital to the target levels and thus meet all final requirements on a consolidated basis. Compliance with the requirements of the ‘too big to fail’ regulations is necessary to ensure adequate resilience of the two Swiss big banks. This is confirmed by our loss potential analyses of both banks as well as historical loss experience during the last financial crisis. With respect to resolution, the statutory deadline for finalising the Swiss emergency plans is the end of this year. In their plans, Credit Suisse and UBS have to demonstrate that they would be able to maintain their systemically important functions without interruption in a crisis.