However, in the intervening period, they have continued to play this role. This state of affairs is not without risks. Ultimately, monetary policy alone cannot remedy all economic ills, especially those of a structural nature. It is therefore important that all the powers involved play their part in solving the problems we face. Ladies and gentlemen, today’s topic focused on the challenges for Swiss monetary policy with regard to the euro. Anything that affects the EU or the euro also affects our country. Consequently, it is very much in our interest that solutions for the structural problems in the EU be found and that economic recovery continue. Having said this, Switzerland should not simply stand idly by and rely on Europe. As a small open economy, we must ‘do our homework’ and adapt to a changing landscape. It is important for companies to continue operating with a high degree of flexibility, and for economic policymakers in all fields – in this country, too – to ensure good business conditions. The SNB will continue to make the most of the latitude afforded by its monetary sovereignty to respond pragmatically to the challenges ahead.
This situation was compounded by weak economic data in the first half of 2011, which pointed to the risk of another global recession. Swiss franc appreciation accelerated in response to these developments, with the currency reaching historic highs against the euro and the US dollar and threatening to plunge Switzerland into a deep recession (cf. chart 3). The discontinuation of the minimum exchange rate in January 2015 The minimum exchange rate – which was to remain in place for almost three and a half years – halted the appreciation of the Swiss franc and helped to ease tensions. When we discontinued the measure in January 2015, the decision was criticised in some quarters. This is understandable, as the scale of the minimum exchange rate’s negative side effects was not yet fully apparent. However, the discontinuation of the minimum exchange rate was  BIS central bankers’ speeches  3  unavoidable; conditions had changed and an analysis of the risks clearly favoured the decision to remove the floor. The overall situation had improved significantly since the introduction of the minimum exchange rate. The economy had regained momentum, confidence in the US dollar had been restored and uncertainty had decreased considerably. Then there was the issue of divergence: the monetary policies of the US Federal Reserve and the ECB were moving in opposite directions. As the markets were expecting the Americans to tighten and the Europeans to substantially loosen monetary policy, the euro had been weakening against the US dollar since mid-2014.