Overall, the SNB’s loan to the StabFund at the end of November 2010 was down to just roughly USD 13 billion, compared to almost USD 20 billion at the end of 2009. At the same time, the overall risk for the SNB decreased from USD 24 billion to USD 16 billion. This USD 16 billion corresponds to the maximum possible loan. This upper limit exceeds the current loan, since part of the StabFund’s portfolio does not require any financing at present. Owing to the continued favourable market situation in the fourth quarter, the value of the fund’s assets is now considerably higher than the value of the loan. The risk of the SNB suffering a loss upon liquidating the fund has thus decreased further. As long as we have to maintain high levels of foreign exchange reserves for monetary policy reasons, the currency risks in our balance sheet will not be easy to reduce. We have, however, taken two measures in an effort to strengthen our balance sheet further. First, we decided back in 2009 to double the annual allocation to provisions over the course of five years. Second, in recent months, we have reduced risk concentrations in currency holdings and borrower categories – which arose from the interventions – through diversification. My colleague, Jean-Pierre Danthine, will discuss this in greater depth. As previously mentioned, the higher level of risk will be evidenced by greater fluctuations in the SNB’s annual earnings.
The aim is not to infringe on FINMA’s jurisdiction. Instead, FINMA and the SNB need to clearly define how the new responsibilities and tasks arising from the urgent need for more rigorous analysis and regulation of systemic risk should be divided between them. At this point, I also want to stress that this macroprudential task does not call into question the SNB’s primary mandate, which is the maintenance of price stability. Instead, it supports the long-term fulfilment of this mandate. The SNB has also expressed its opinion – along the lines of this proposal – on the recommendations made by the business audit commissions of the National Council and the Council of States in their report on the financial crisis. 2  BIS Review 173/2010  SNB balance sheet risks In my following remarks, I would like to look at the SNB’s balance sheet risks. As the Chairman of the Governing Board, Philipp Hildebrand, has already mentioned, it was primarily the large-scale purchases of foreign currency that contributed to the expansion of our balance sheet to its current level of approximately CHF 280 billion. Of this amount, CHF 260 billion is made up of currency reserves, which comprise not only foreign exchange, but also gold and the IMF’s special drawing rights. If we add to that the SNB’s loan to the stabilisation fund, over 95% of our assets are denominated in foreign currency. Not only is the balance sheet longer as a result, it also carries more risk.