As you will see in slide 5, the share of these investments amounted to more than 70% at the end of 2015. The SNB has a very long investment horizon. In view of this, the criterion of security is taken into account by structuring investments so that at least the real value is preserved over the long term. Thus, after liquidity and security, the criterion of return is also taken into consideration. In order to improve the long-term risk/return profile, certain interest rate, equity, credit and liquidity risks are intentionally entered into, based on the associated risk  4  BIS central bankers’ speeches  premia. These risks are spread as widely as possible by diversifying the investments. For instance, government bonds in the main currencies are supplemented by additional asset classes including corporate bonds and equities. In particular, the share of equities, which currently amounts to 18%, increases the expected return in our portfolio. Challenges when investing high foreign exchange reserves The SNB is one of the world’s major investors. At the end of 2015, our foreign exchange reserves amounted to around CHF 560 billion. The management of large foreign currency investments comes with its own set of challenges. I would like to focus on three of these challenges in particular, and explain briefly how we address them: first, the widening of fluctuations in absolute investment returns; second, non-financial aspects, which have become much more important in our globally diversified equity portfolio; and third, liquidity conditions, which have deteriorated in some markets.
It is therefore not entirely correct to compare the income  3 In the research literature, one often tries to distinguish the independent, “pure” effect of monetary policy from  the effect of the monetary policy that systematically reacts to changed circumstances. This is done by identifying monetary policy “shocks”, that is, changes in monetary policy that are unexpected, given how the central bank normally reacts to changed circumstances. The size of the monetary policy effect will thus depend on, among other things, the assumption of how monetary policy normally reacts. 5 [14]  and wealth distribution after a period of expansionary monetary policy with the distribution prior to these measures being taken. The point of comparison should rather be how the distribution would have looked without the expansionary monetary policy. Another difficulty is what time perspective one should have to determine the effects of monetary policy. I have argued that it is important to take into account the total effect of monetary policy on the economy. Asset prices are affected relatively rapidly, but it takes time before the total effect of monetary policy has an impact on the real economy and ultimately inflation. Moreover, a common starting point when discussing the effects of monetary policy is that in the long term it is neutral with regard to real economic quantities such as growth, unemployment and income distribution. In this perspective, one can therefore argue that monetary policy should only have minor distributional effects, if any at all.