Market developments were shaped by the more pessimistic assessment of the economic outlook and expectations that monetary policy could remain expansionary for longer. At the end of May and beginning of June, deteriorating risk sentiment triggered a flight to safe havens and a corresponding decline in government bond yields. These developments on the equity and bond markets had only a limited effect on the foreign exchange markets. In the major currencies, trading ranges were generally narrow and risk premia low, despite heightened macroeconomic and political risks. Swiss franc volatility also remained moderate. The trade-weighted exchange value of the Swiss franc has barely changed Page 1/3  Berne, 13 June 2019 Andréa M. Maechler  News conference  overall since the last news conference, and the currency remains highly valued. The Swiss franc depreciated in April following the postponement of the UK’s exit from the EU, however in May, the escalation of the US-China trade dispute and concerns about Italy’s budget situation reversed this depreciating trajectory. The risk of renewed upward pressure on the Swiss franc is high, given the many hotspots around the world. This explains why it still costs more to hedge against Swiss franc appreciation than against Swiss franc depreciation on the options market. The franc thus continues to be in demand as a safe-haven currency and the situation on the foreign exchange market remains fragile. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market as necessary therefore remain essential.
For instance: What kind of financial risks do climate and environmental threats pose for the finance industry? And could these risks weaken the resilience of the financial system, or indeed affect macroeconomic variables and monetary policy? The SNB’s goal in joining the NGFS is to engage in dialogue and share knowledge in order to better understand – and anticipate – the potential impact of climate risks. Page 3/3