Since 15 January, we have repeatedly and thoroughly explained our reasons for discontinuing the minimum exchange rate and introducing negative interest on sight deposits at the SNB. Upholding the minimum exchange rate was no longer sustainable given the changes taking place in the international arena and the sharply diverging monetary policy stances of the world’s major currency blocks. In formulating our monetary policy, we are confronted with an exceptionally complex situation on international financial markets. What is more, the global economy is still grappling with the after-effects of the financial and economic crisis, not least in the form of high levels of uncertainty. These are the realities that the SNB – and the Swiss economy – are facing. Turning a blind eye is not an option. In this environment, we were aware that the discontinuation of the minimum exchange rate would cause Switzerland’s economy to slow. While the data from the first quarter confirm that this slowing process is now underway, the country’s economic development since 15 January has been broadly in line with our expectations. Our monetary policy is geared towards this challenging set of circumstances and is currently guided by our willingness to take an active role in the foreign exchange market and apply negative interest rates. This two-pronged approach is designed to weaken the Swiss franc. The SNB’s interventions in the foreign exchange market, which feed more liquidity into the banking system, reinforce the effect of both of these measures.
7  Recent research indicates that a discount rate of 4 per cent may be somewhat high for investments with a very long horizon, see Kåre P. Hagen and Karl R. Pedersen’s newspaper article “Lønnsom infrastruktur (Profitable infrastructure)” in Dagens Næringsliv, 3 June 2010. 4  BIS Review 78/2010  Let me conclude. The adventures of Askeladden are often tales of success. Askeladden embraces every challenge and always comes out ahead. It is too early to draw conclusions as to how successful Norway has been in managing its oil wealth. In ten years or so, when petroleum production falls markedly and the oil fund is no longer increasing in size, the cost level in Norway will have to be reduced relative to other countries. This process may be painful, even though Norway has its own currency and a floating exchange rate. Our welfare state may also have become too large and the adjustment required here may also prove to be very demanding. Nonetheless, there are aspects of our oil wealth management that have served us well. Thank you for your attention. BIS Review 78/2010  5  6  BIS Review 78/2010  BIS Review 78/2010  7