And it introduces a cooperative approach to CCP supervision, involving all relevant supervisors and central banks in “supervisory colleges” to ensure that CCPs are properly overseen across Member States. The global regulatory push towards central clearing has contributed to making CCPs extremely important parts of the global financial system. In 2009, just 40% of all interest rate derivatives contracts were cleared through CCPs, but by 2017 this had increased to 83%1. New developments and current challenges The rising importance of CCPs means that their supervisory framework needs to be reformed. Most clearing is now done across borders and is strongly concentrated in a limited number of EU CCPs, which have become systemically important for the EU as a whole. Two of these CCPs are based in the United Kingdom. Currently, they clear around 95% of eurodenominated interest rate derivatives and around 30% of euro-denominated repos. Thus, a significant disturbance involving a major UK CCP could affect financial stability and market functioning across the EU. On top of this, most of the liquidity provided by central banks tends to be channelled through the repo market. The United Kingdom’s withdrawal from the EU means the supervisory framework for non-EU countries must be adapted. EU authorities must continue to be able to not only closely monitor UK CCPs but ensure they comply with EU regulations.
Both exchange rates and interest rates then determine monetary conditions in Switzerland, and thus eventually output and inflation. Although short-term interest rates are the main monetary policy instrument, the SNB has, in recent years, been using exchange rate interventions as an additional tool. Due to the safehaven status of the Swiss franc, the SNB has been active on the foreign exchange market. We are also willing to intervene, as required, as part of our current monetary policy. Once again, banks have been at the heart of monetary policy transmission. They have acted as intermediaries of the SNB’s foreign exchange interventions. 4 With depressed international demand and a strong Swiss franc weighing on GDP, credit availability has been crucial for the domestic economy. Low interest rates and ample liquidity provision by the SNB have facilitated banks’ intermediation activities. In short, the SNB’s  4  2  For further details, cf. Lukas Altermatt and Romain Baeriswyl, The effect of the monetary base expansion on the balance sheet of domestic banks, SNB Quarterly Bulletin, 1/2015, and Raphael Auer, A safe haven: international demand for Swiss francs during the euro area debt crisis, SNB Quarterly Bulletin, 2/2015. BIS central bankers’ speeches  policy has supported the banks’ provision of credit to the real economy. The banking sector, which is traditionally procyclical, has in turn benefited from improved economic conditions. In order to fulfil our mandate we need a stable banking system. Financial stability is key, both for the SNB and the whole economy.