From this mixed bag, only one clear explanation emerges: that there is no clear explanation. To a first approximation, we remain unsure quite what caused the Flash Crash or whether it could recur. 1 That conclusion sits uneasily on the shoulders. Asset markets rely on accurate pricing of risk. And financial regulation relies on an accurate reading of markets. Whether trading assets or regulating exchanges, ignorance is rarely bliss. It is this uncertainty, rather than the Flash Crash itself, which makes this an issue of potential systemic importance. In many respects, this uncertainty should come as no surprise. Driven by a potent cocktail of technology and regulation, trading in financial markets has evolved dramatically during the course of this century. Platforms for trading equities have proliferated and fragmented. And the speed limit for trading has gone through the roof. Technologists now believe the sky is the limit. This rapidly-changing topology of trading raises some big questions for risk management. There are good reasons, theoretically and empirically, to believe that while this evolution in trading may have brought benefits such as a reduction in transaction costs, it may also have increased abnormalities in the distribution of risk and return in the financial system. Such abnormalities hallmarked the Flash Crash. This paper considers some of the evidence on these abnormalities and their impact on systemic risk. Regulation has thin-sliced trading. And technology has thin-sliced time. Among traders, as among stocks on 6 May, there is a race to zero.
Page 2/6  Berne, 12 December 2019 Thomas Jordan  News conference  The external value of the Swiss franc has remained stable since the monetary policy assessment in September. There has also been scarcely any change in the trade-weighted exchange rate over 2019 as a whole, although it initially declined before appreciating again in the summer. The Swiss franc thus remains highly valued, and the situation on the foreign exchange market is still fragile. Short-term interest rates are close to the SNB policy rate. The long-term Swiss franc rates reached new lows in the summer, and have recovered only slightly since. This pattern reflects global interest rate movements. The yield on 10-year Swiss Confederation bonds currently stands at –0.5%, compared with –0.2% at the beginning of the year. The long-term interest rates in the euro area and the US have declined even more strongly. All in all, the low interest rate environment around the world has become more entrenched over the course of 2019. Finally, inflation expectations have declined slightly in Switzerland by comparison with the start of the year. However, they remain within the range of 0% to 2% that the SNB equates with price stability. Five years of negative interest  Ladies and gentlemen, the SNB introduced the negative interest rate five years ago. Hardly anyone thought then that it would still be in place at the end of 2019. I would therefore like to take this opportunity to set out for you why we are convinced that negative interest remains necessary today.