Federal Council adopts monetary policy report
Bern, 21.12.2016 - During its meeting on 21 December 2016, the Federal Council approved a report on monetary policy, thereby responding to various postulates referred by Parliament after the discontinuation of the exchange rate floor for the euro. The report concluded that the Swiss National Bank has appropriate governance and can perform its mandate effectively with the existing legal framework.
Many parliamentary procedural requests on monetary policy in general and on the Swiss National Bank (SNB) in particular were submitted following the discontinuation of the exchange rate floor for the euro on 15 January 2015: the Bischof 15.3091 and 15.4053 postulates on negative interest rates and SNB governance, the Rechsteiner 15.3367 postulate on the role of the Swiss franc and the Cramer 15.3208 postulate on the strong franc and shopping tourism.
The Federal Council has drawn up a report on these topics. It shows that the SNB's monetary policy concept has proved its worth also in difficult situations such as in the wake of the global financial crisis from 2007 to 2009. The National Bank has all the instruments necessary to perform its mandate, i.e. to ensure price stability while paying due attention to the development of the economy. Furthermore, it can influence the value of the franc if it considers this to be necessary. Particular attention was paid to the issue of SNB governance. The Federal Council considers the SNB's existing legal basis to be appropriate and sees no need to change it.
Interest rates are currently very low worldwide. This low interest rate environment is highly challenging for pension funds and banks, irrespective of the SNB's negative interest rates, which it introduced to reduce the appeal of investments in Swiss francs. They are effective only if all financial market players are affected by them. Any exceptions would create a precedent which would diminish the effectiveness of monetary policy.
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Philipp Rohr, Communications Officer, Federal Finance Administration FFA
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