As a rule, Switzerland has lower interest rates than other countries, one of the reasons for this being that investors value the security of Swiss franc investments. Following the outbreak of the financial crisis, many central banks quickly lowered their policy rates towards zero. This meant Swiss money market rates were practically at the same level as those of other countries. Amid the prevailing uncertainty at that time, the demand for Swiss francs rose sharply. To counter the extreme upward pressure, and thus ward off the threat of a severe recession coupled with deflation, we introduced the minimum exchange rate in 2011. This initially brought calm to the situation. Owing to international developments, it became apparent at the beginning of 2015 that the minimum exchange rate was no longer sustainable. To limit the appreciation of the Swiss franc after its discontinuation, we set a negative interest rate of −0.75%. The impact of negative interest proved considerable, as it helped stabilise the exchange rate situation in short order. Without it, the franc would have been significantly stronger in recent years, which would have been highly detrimental to the Swiss economy and would have jeopardised price stability. And, ladies and gentlemen, negative interest remains central to our monetary policy to this day.
Unusual though they may be, ladies and gentlemen, negative interest rates are nonetheless necessary in the current situation if we are to fulfil our mandate against the backdrop of low interest rates worldwide. At the same time, low interest rates do give rise to certain challenges. Negative interest therefore also attracts criticism. That said, we are convinced that the benefits clearly hold sway. Our assessment centres on the fact that we take an overall view, and seek to serve the interests of the country as a whole. From the perspective of savers and pension funds, the present situation with low interest income is, of course, difficult. You might think that the SNB could simply remedy this. But let us assume that we were to raise the SNB policy rate to zero in the current situation. The economy would cool down dramatically, inflation would fall well into negative territory, and unemployment would rise. In such an environment, there would be scarcely any increase in longer-term interest rates. Furthermore, we would probably soon have to lower our policy rate again given the economic slowdown and lower inflation. Hence any gains in income for savers and pension funds would not be sustainable. From the banks’ perspective, negative interest rate payments to the SNB are a cost factor. We are aware of the burden this represents. That is why in September we adjusted our calculation of the exemption thresholds in such a way that the payments made by the banking system have nearly halved.