The three-month Libor has been in negative territory since the announcement, dropping to a low of –0.96%; it is currently roughly in the middle of the target range (cf. chart 4). Long-term interest rates have also fallen, and the exchange rate too has now pulled back from the extreme values observed immediately following the discontinuation announcement. In tradeweighted terms, the Swiss franc is still at least 10% higher than it was at the beginning of the year. Overall, the Swiss franc is significantly overvalued and should weaken with time. When discussing the structure of the instrument, our deliberations focused on the interest rate level, but also in particular on the exemption thresholds above which negative interest was to be charged. We ultimately concluded that these thresholds should be calculated according to the minimum reserves banks are legally obliged to hold. This is a method that is both firmly anchored in law and for which clear rules exist. As a result, banks with large Swiss franc holdings at the SNB relative to the size of their balance sheets bear a heavier burden than banks with lower sight deposit balances. The fact that the banks face differing burdens has been criticised in certain quarters. Some have argued, for instance, that negative interest rates are distorting competition. This is certainly not our intention. Negative interest is a monetary policy measure that – like any other form of interest rate change – affects different industries and companies in different ways.
The US economy is more robust today than it was in 2011. The latest GDP figures for the euro area are once again more reassuring, although the situation remains difficult. In addition, the substantial fall in oil prices has had an easing effect. Despite all this, the risks – notably the debt dispute between Greece and the rest of the euro area, as well as the crisis in Ukraine – are not inconsiderable. In the long term, I am confident that our economy will be able to cope with Swiss franc appreciation. The currency has been strong in the past, and has a tendency to appreciate. While a strong currency is an expression of a sound economy, it also presents companies with major challenges, as an appreciating franc means higher prices for foreign customers buying from Swiss firms. In order to remain competitive, this disadvantage has to be continuously offset by adaptability, quality and innovation. Various competitiveness and innovation indicators suggest that Swiss companies have been very successful on this score in the past; the country regularly ranks among the leaders in these categories (cf. chart 6). These findings inspire optimism, however it is important to remember two things. First, we are dealing with averages here. When it comes to managing the new currency landscape, the options available to individual industries and companies will vary greatly; and so, in turn, will the impact of Swiss franc strength.