For institutions that are legally or contractually obliged to attain specific returns it is difficult to comply with these requirements at the moment. The current low interest rate environment is a temporary phenomenon attributable to the severe economic turmoil resulting from the financial crisis. We expect that the economy will continue to recover, and that interest rates worldwide will increase again. The first signs of this are evident in the US. However, looking at the international situation, it is also clear that the interest rate in Switzerland cannot be higher than in the rest of the world, because otherwise we would be threatened with major inflows into the Swiss franc. Some claim that negative interest goes against human nature and deprives the economy of an important yardstick. However, that is not the case. The interest rate is the reward for forgoing consumption. The resources saved in this manner are basically available for investment. Investment, in turn, must generate a return that allows the interest to be paid. When uncertainty is high, savings increase, on the one hand. On the other hand, however, the increased uncertainty or the lower potential for returns causes businesses to postpone investment. Under these conditions, therefore, the interest rate falls; in extreme circumstances, it may even move into negative territory. Low or negative interest rates are an expression of the fact that, in the current situation, there is a very high supply of savings capital worldwide and a relatively low demand for investment.
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