While rules and regulations will certainly be there to ensure orderliness, fair and ethical conduct, risks of a rapidly changing environment would require flexibility and agility in their design. This is both good and bad news. The good news is that the design of rules could be more principle based, outlining key parameters and outcomes, leaving the ‘how’ to achieve them to the best practices of the industry. The bad news is that the industry will have to be independent in figuring out and ensuring compliance. Consequently, there is a need for the industry to further elevate its capacity and capability for the new environment. The goal is not only the greater adoption of digital technology in financial services which will undeniably reshape customer behaviour, business models and the traditional structure of financial intermediation for the better. It is also the push for the industry to adapt, innovate and change. In the banking sphere, digital banking is just around the corner. The Bank will issue a discussion paper on this by year end and perhaps, a regulatory framework by next year. Digital insurers could be next. What about financial markets? I put this challenge to you ~ think about how your industry could change with these developments, how you should adapt and change, and what needs to be done. Tell us what you think and you can reach out to the FMC to share your thoughts and ideas. Another area of focus that has captured wide attention is that of climate change and sustainability.
The SNB’s expansionary monetary policy contributed to the depreciation of the Swiss franc over the course of the year and thus also supported the economy. Inflation is currently negative, due to the appreciation of the Swiss franc following the discontinuation of the minimum exchange rate and to the reduction in commodity prices. We expect it to return to positive territory in 2017. We will keep our options open should other measures be necessary to fulfil our mandate. But, as always with monetary policy decisions, we need to carefully weigh up the pros and cons to serve the interests of the country as a whole. In the wake of the financial crisis and the use of unconventional measures, central banks have become the focus of intense public interest. Various reform proposals are being discussed and we welcome these public debates. New ideas need to be seriously considered and evaluated. The intentions behind the sovereign wealth fund and sovereign money projects are commendable. But, on closer examination, the drawbacks outweigh the benefits in both cases. Finally, on behalf too of my colleagues in the Governing Board, Fritz Zurbrügg and Andréa Maechler, I would like to take this opportunity to thank our employees for their hard work and dedication. We would also like to thank our shareholders for their solidarity with the SNB and for their loyal support.