Implementation of the investment policy  Our investment policy has not fundamentally changed with the new Act. The monetary reserves continue to constitute core assets for monetary policy. They allow the National Bank to exert an influence on the Swiss franc exchange rate in exceptional situations and are available as an internationally accepted means of payment in a crisis situation. This presupposes a minimum degree of liquidity of these assets. Moreover, monetary reserves enhance the credibility of monetary policy and foster confidence in the Swiss franc. The security of these investments and growth of the monetary reserves in step with the development of the Swiss economy is an important consideration in this context. This is why monetary reserves ought to provide an adequate return, while taking into account the monetary policy restrictions. It is the aim of our investment policy to strike an optimal balance between the criteria of liquidity, security, and return. We assess and regularly review the National Bank’s liquidity requirements - i.e. its need for easily realisable and hence easily accessible assets - on the basis of our experience and taking due account of the current situation. Given the Bank’s large portfolio holdings in US dollar and euro government bonds, the liquidity requirements are currently more than met. This creates a certain amount of leeway for investing in instruments that are less liquid but generate a higher return. The investment criterion “security” must be seen in the context of the monetary reserves as a whole.
The Investment Policy Guidelines of the Swiss National Bank, which have just been published for the first time, contain additional information on the investment and risk control process and on the investment universe. They define the principles of investment policy and the investment categories underlying the strategy, and describe the areas of responsibility. The quantitative information already published in the Annual Report will also be published on a quarterly basis in the future, thus providing the public with even more comprehensive information on our investment activities. 2  BIS Review 39/2004  5. Conclusion  The management of the monetary reserves has gained in importance. The National Bank Act requires the National Bank to manage its monetary reserves professionally, subject to the primacy of monetary policy. After the new Act entered into force, we began to further optimise the investment structure. The increased leeway for investment is used for greater diversification. The structure of the National Bank’s investments is thus becoming more efficient overall, yet without compromising monetary policy requirements in terms of the liquidity and security of these investments. We will also take advantage of the extended legal scope with regard to the free assets, i.e. the proceeds from the sale of gold reserves no longer required. Investment Policy Guidelines of the Swiss National Bank (235 kb)  BIS Review 39/2004  3