Core Viewpoint - The Swiss National Bank (SNB) has decided to maintain its policy interest rate at 0%, indicating readiness to intervene in the foreign exchange market if necessary. This decision aligns with market expectations, but there are concerns about the impact of high U.S. tariffs on Swiss economic growth, which may lead to potential rate cuts in the future [1][2]. Group 1: Monetary Policy and Economic Outlook - The SNB's current monetary policy is described as expansionary, with a higher threshold for entering negative interest rates compared to normal rate cuts. The bank is prepared to use all available tools if needed [1][3]. - The chief economist at Syz Bank believes that the current robust monetary policy is reasonable given the economic and political landscape, with the main concern being uncertainty surrounding the export sector [1]. - UBS economists highlight that tariffs pose the greatest downside risk to Swiss economic growth in the short term, and even a reduction in rates to negative territory may not effectively counteract the impact of tariffs [1]. Group 2: Economic Growth and Inflation Projections - Swiss GDP growth is expected to slow to 0.5% by the second quarter of 2025, with high U.S. tariffs likely to suppress exports and investments, particularly in the machinery and watchmaking sectors. However, the service sector remains resilient [2]. - The SNB forecasts moderate economic growth, with GDP growth expectations of 1% to 1.5% for 2025, slowing to nearly 1% in 2026, and an anticipated rise in the unemployment rate [2]. - Current inflation pressures are mild, with the Swiss inflation rate rising to 0.2% in August, driven mainly by the tourism sector and imported goods. The SNB projects inflation rates of 0.2% for 2025, 0.5% for 2026, and 0.7% for 2027 if the policy rate remains at 0% [2].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The "History of Overseas Central Bank Bond Purchases" series systematically analyzes key stages of bond - purchase policies of the Bank of Japan, the Federal Reserve, and the European Central Bank. Their policies have similarities and differences in approach, implementation timing, and scale [1]. - The Bank of Japan and the Federal Reserve's bond - purchase policies evolved from traditional to innovative tools. The Bank of Japan was a pioneer in unconventional monetary policies, starting quantitative easing in 2001. The Federal Reserve launched quantitative easing in 2008. The ECB was more cautious about unconventional policies and started full - scale quantitative easing in 2015 [1]. - The bond - purchase policies of the Federal Reserve, ECB, and the Bank of Japan have been complex. The Federal Reserve ended QE in 2014, then had a slow balance - sheet reduction (QT), which was halted early in 2019. It restarted QE in 2022 due to the pandemic and then QT due to high inflation. The ECB stopped APP net purchases in 2018, restarted in 2019, and ended bond - buying in 2022 and started passive QT in 2023. The Bank of Japan ended negative interest rates and started balance - sheet reduction in March 2024. The Bank of Japan's exit was more cautious and delayed, the Federal Reserve's policy cycle was more flexible, and the ECB's policy shift was more sluggish [2]. - The bond - purchase scales of the three central banks are huge. As of August 20, 2025, the Bank of Japan's scale was 574.8 trillion yen, the Federal Reserve's was $6.5 trillion, and the ECB's was 4.2 trillion euros, accounting for 79.5%, 98.6%, and 69.2% of their total assets respectively. Relative to economic aggregates, the Bank of Japan's balance - sheet expansion was more significant [3]. - The Federal Reserve and the ECB have a wider range of bond - purchase categories. The Federal Reserve mainly buys MBS and Treasury bonds. The ECB's bond - purchase scope includes government bonds, covered bonds, asset - backed securities, and corporate bonds. The Bank of Japan, besides buying Treasury bonds, also buys a large amount of stock ETFs and J - REITs [3]. - The Bank of Japan's YCC policy directly sets an interest - rate ceiling, marking a new stage in monetary policy by shifting from controlling bond - purchase quantity to controlling bond interest rates [3]. Summary by Relevant Catalog First Stage (2009 - 2010): First Attempt during the Sub - prime Crisis - **Macro Background and Bond - purchase Policy Goals**: Provide liquidity to the bond market. After the 2008 financial crisis, the euro - area banking system faced a liquidity crisis, especially in the covered - bond market [14][15]. - **Bond - purchase Method**: Continuously make small - scale purchases in the primary and secondary markets. In May 2009, the ECB announced the CBPP, buying 600 billion euros of covered bonds from July 2009 to June 30, 2010, with a maximum holding of 611.4 billion euros [16]. - **Bond - market Impact Analysis**: The CBPP had a certain boosting effect on the covered - bond market, reducing the yield and spread of bank - issued covered bonds and enhancing bank financing ability. However, due to its limited scale, its impact on the overall bond market and economy was relatively mild [17]. Second Stage (2010 - 2012): Emergency Response during the European Debt Crisis - **Macro Background and Bond - purchase Policy Goals**: Provide liquidity to the bond market. After the Greek debt crisis, market panic spread to peripheral countries, causing a sell - off of their sovereign bonds and a surge in yields. The ECB launched the "Securities Markets Programme" (SMP) to address market liquidity and financing difficulties [22]. - **Bond - purchase Method**: Buy sovereign bonds of troubled countries in the secondary market. The SMP aimed to buy public and private - sector bonds in the secondary market without disclosing the quantity, time frame, or target level. It initially focused on Greece, Ireland, and Portugal, then expanded to Italy and Spain. The ECB also sterilized the injected liquidity. In 2011, SMP was restarted and expanded. The SMP's total reached a maximum of 2,195 billion euros by March 5, 2012. In 2011, the ECB launched CBPP2 with a planned scale of 400 billion euros but only bought 164 billion euros. In 2012, the "Outright Monetary Transactions" (OMT) plan was introduced but never activated [23][24]. - **Bond - market Impact Analysis**: The SMP had an immediate positive impact on the bond market, reducing the yields of Spanish and Italian bonds. The OMT had an "announcement effect", significantly reducing the yields of Spanish and Italian bonds. However, as the economic recovery was weak, the effectiveness of the SMP decreased [25]. Third Stage (2013 - 2018): Full - scale Quantitative Easing under Persistent Low Inflation - **Macro Background and Bond - purchase Policy Goals**: Implement QE in the euro area. After the European debt crisis, the euro - area economy recovered slowly, with low inflation and high financing costs. The ECB introduced negative interest rates and launched multiple bond - purchase programs [31]. - **Bond - purchase Method**: Use a combination of measures. In 2014, the ECB announced CBPP3 and the Asset - Backed Securities Purchase Program (ABSPP). CBPP3 bought covered bonds, with a holding of 2,702 billion euros by the end of 2018. ABSPP bought asset - backed securities, with a holding of 276 billion euros by the end of 2018. In 2015, the Expanded Asset Purchase Programme (APP) was launched, including the Public Sector Purchase Programme (PSPP) and the Corporate Sector Purchase Programme (CSPP). The APP ended net purchases in December 2018, with a cumulative net purchase of about 2.65 trillion euros [32][33][35]. - **Bond - market Impact Analysis**: The ECB's large - scale bond purchases led to a significant decline in long - term government bond yields in the euro area. The yields of German 10 - year government bonds fell into negative territory in 2016, and the yields of French bonds also dropped close to zero. The spread between peripheral and core countries generally narrowed [39]. Fourth Stage (2019 - 2023): Emergency Bond - purchase Plan during the Pandemic - **Macro Background and Bond - purchase Policy Goals**: Intervene promptly to maintain financial stability. In 2019, due to economic slowdown and low inflation, the ECB restarted QE. In 2020, the "Pandemic Emergency Purchase Programme" (PEPP) was launched to deal with the impact of the COVID - 19 pandemic [42]. - **Bond - purchase Method**: Systematically increase purchases. In September 2019, the ECB restarted QE with a monthly purchase of 200 billion euros. In March 2020, an additional 1,200 billion euros of purchases were announced. The PEPP was launched in March 2020 with an initial scale of 7,500 billion euros, which was later expanded to 1.85 trillion euros. The PEPP ended net purchases in March 2022, with a cumulative purchase of about 1.71 trillion euros [43][45]. - **Bond - market Impact Analysis**: The PEPP effectively alleviated market panic, stabilized investor confidence, and reduced excessive market volatility. During the implementation and scale - expansion of the PEPP, the 10 - year bond yields in Europe generally declined. When the purchase speed slowed down, bond yields generally rose [52]. Summary and Insights from Overseas Central Bank Bond Purchases - Similarities and differences exist among the bond - purchase policies of the Bank of Japan, the Federal Reserve, and the ECB in terms of approach, implementation timing, and scale, as detailed in the core viewpoints above [53].

Core Viewpoint - The article discusses the role and impact of central banks in the global economy, particularly focusing on unconventional monetary policies implemented during the 2007-2009 financial crisis and the COVID-19 pandemic, highlighting both their effectiveness and unintended negative consequences [3][4]. Summary by Sections Introduction - The introduction emphasizes the pervasive influence of central banks, likening their role to both a magician and a dictator in the economic world, and discusses the mysterious qualities of power in financial systems [8]. Chapter 1: Legacy of the Great Depression - This chapter explores the historical context of central banking, including the lessons learned from past financial crises and the evolution of crisis management strategies [8]. Chapter 2: Leverage as Poison - It identifies five driving factors behind the largest financial crisis in history, including the U.S. housing bubble and the role of securitization in spreading risk [8]. Chapter 3: The Road to Hell - The chapter details the global spread of financial turmoil, the interplay between monetary markets and major financial institutions, and the responses from the U.S. and European central banks [8]. Chapter 4: Breaking the Norms - This section discusses the unconventional measures taken during financial crises, such as zero interest rates and quantitative easing, and the challenges faced by central banks in managing these policies [9]. Chapter 5: High Costs - It outlines various syndromes that emerged from the financial crisis, illustrating the complex consequences of central bank interventions and the emergence of shadow banking [9]. Chapter 6: The Eve of Change - The final chapter reflects on the need for a paradigm shift in monetary policy, questioning the long-standing 2% inflation target and advocating for a more balanced approach to financial stability [9]. Conclusion - The conclusion calls for a new path towards stable growth in the financial system, moving beyond unconventional measures [9].

Group 1: Monetary Policy Framework - Japan's monetary policy framework has undergone several structural changes since the introduction of the zero interest rate policy in February 1999, primarily due to prolonged deflation and economic stagnation[1] - The direct goal of the monetary policy framework from 2013 to 2023 was to address the long-term economic stagnation and chronic deflation that followed the bursting of the economic bubble in the early 1990s[2] - The introduction of the quantitative and qualitative easing (QQE) policy in April 2013 aimed to double the monetary base within two years to stabilize inflation at 2%[2] Group 2: Key Policy Components - The QQE policy was complemented by the introduction of negative interest rates in January 2016 and the yield curve control (YCC) policy in September 2016[3] - The QQE policy led to a temporary increase in the Consumer Price Index (CPI) growth rate to 3.7% in 2014, but it fell back to around 0% due to declining global commodity prices and an increase in the consumption tax[2] - The negative interest rate policy aimed to lower nominal interest rates below the natural rate and alter overall inflation expectations, with excess reserves divided into three categories with different interest rates[3] Group 3: Economic Impact - Japan's natural rate of interest has been on a downward trend since the 1990s, contributing to weak demand and low corporate growth expectations[2] - The prolonged deflation led to a stagnation in the normal economic cycle, where price increases, corporate profits, wage growth, and demand expansion became disconnected[2] - The structural issues in Japan's economy resulted in a shift from a capital shortage to an excess savings situation among firms, leading to "balance sheet recession" and low potential GDP growth rates[2]

Group 1 - The U.S. is likely to maintain the recently imposed tariffs on multiple countries, including a 35% tariff on most Canadian goods, 50% on Brazil, 25% on India, and 39% on Switzerland, as stated by U.S. Trade Representative Jamieson Greer [1] - The Swiss government is willing to modify its concessions in response to the high tariffs, with concerns that the 39% tariff could lead to an economic recession in Switzerland [1][2] - The Swiss economy is heavily export-oriented, and the imposition of tariffs could significantly impact its economic output, potentially reducing GDP by over 1% if long-term export disruptions occur [2] Group 2 - The Swiss government is exploring options to address the trade deficit with the U.S., which reached 38.5 billion Swiss francs (approximately 48 billion USD) last year, including increasing investments in the U.S. and purchasing U.S. liquefied natural gas (LNG) [2] - The Swiss stock market is expected to be impacted by the tariff news, with predictions of a potential interest rate cut by the Swiss National Bank in September due to weakened economic growth and increased deflationary pressures [3]

Group 1: Debt Levels and Economic Impact - The United States has a national debt exceeding $36 trillion, with a per capita debt of over $100,000, and annual interest payments surpassing $1 trillion, which is more than its defense spending [1][3] - Japan's government debt stands at $9 trillion, amounting to 227% of its GDP, with interest payments increasing by 35% due to rising interest rates, leading to significant corporate bankruptcies and economic stagnation [4][7] - China's total debt is $86 trillion, with a debt-to-GDP ratio of 63.8%, which is considered safer compared to the US and Japan, as the government can convert short-term high-interest debt into long-term low-interest debt [6][8] Group 2: Economic Strategies and Consumer Behavior - The US is facing challenges as countries reduce their purchases of US debt, leading to a tightening debt market [1][3] - Japan struggles with low consumer spending due to a savings rate of only 1.5%, and the government is hesitant to raise consumption taxes amid an aging population [7] - China is focusing on using debt for infrastructure projects that can generate returns, stimulating consumption and rural industries, contrasting with the US and Japan's reliance on borrowing without productive output [6][8]

Core Viewpoint - The European Central Bank (ECB) considers large-scale asset purchases as the best unconventional monetary policy tool for managing monetary policy, especially when interest rates are at zero [1][2]. Group 1: Monetary Policy Tools - Francois Villeroy de Galhau, a member of the ECB's governing council, emphasizes that quantitative easing (QE) should be the preferred option for achieving lasting changes in monetary policy [1]. - Villeroy expresses a preference for QE over negative interest rate policies, despite past criticisms regarding potential side effects such as asset bubbles and increased inequality [1]. - The ECB's evaluation report suggests a possible future reactivation of QE, although some officials indicate that its use may be more restrained [1]. Group 2: Policy Effectiveness - Isabel Schnabel, a member of the ECB's executive board, notes that the cost-benefit ratio of QE for stimulating the economy is no longer ideal, while long-term refinancing operations have shown significant effectiveness in restoring bank lending [1]. - Philip Lane, the ECB's chief economist, states that the intensity of any policy response will depend on the severity of the underlying issues [1]. Group 3: Risk Management - Villeroy asserts that the ECB's recent evaluation clarifies the principle of "moderate" use of such tools and suggests that negative impacts can be mitigated [2]. - He mentions that there are various ways to control the potential risks associated with the composition of the central bank's balance sheet due to QE [2].

Core Viewpoint - The article discusses the book "The Hand of Money," which analyzes the role and impact of central banks in the global economy, particularly focusing on unconventional monetary policies and their consequences during financial crises [3][4]. Summary by Sections Book Overview - The book provides a deep analysis of the central bank's role in the economy, particularly during the 2007-2009 financial crisis and the COVID-19 pandemic, examining unconventional monetary policies like quantitative easing and negative interest rates [3]. - It highlights the effectiveness and shortcomings of these policies in stabilizing financial markets and stimulating economic growth, while also addressing unintended negative consequences such as debt accumulation and increased wealth disparity [3]. Author Background - Johan Van Overtveldt, the author, is a former Belgian Minister of Finance and has extensive experience in economic management and central banking policy [4]. - Stijn Rocher, the co-author, serves as a policy advisor to the Flemish Minister of Finance and holds a PhD from the University of Antwerp [5]. Key Themes - The book emphasizes the importance of trust in the functioning of central banks, drawing parallels to Confucian teachings on governance and the necessity of trust for effective monetary policy [14]. - It warns of the over-reliance on central bank policies since the Great Moderation era, introducing various "syndromes" that may arise from the misuse of monetary policy, such as the "Butch Cassidy Syndrome" and the "Michael Jackson Syndrome," which reflect the dangers of excessive debt and economic dependency on central bank interventions [15][16]. Conclusion - The book aims to demystify central banking and monetary policy, encouraging a better understanding of their complexities and promoting a more responsible financial system that serves society [16].

Group 1 - The appreciation of the yen against the dollar is partially supported by the depreciation of the dollar due to the U.S. monetary easing policies aimed at addressing domestic economic recession and high inflation [3][4] - The long-term depreciation of the yen is attributed to structural issues within the Japanese economy, including a phenomenon of "structural yen selling" driven by Japanese companies' overseas investments [3][4] - Japan's low interest rate policy and economic stagnation have led to capital outflows, further exacerbating the depreciation of the yen [4][6] Group 2 - Global economic uncertainties, including U.S. monetary policy and the recovery of the European and Chinese economies, significantly impact the yen's value [6][7] - The reliance on exports makes Japan's economy vulnerable to fluctuations in the yen's exchange rate, which can affect the competitiveness of Japanese exporters [6][9] - Japan must focus on internal economic reforms and reduce dependence on external markets to achieve sustainable economic growth and address the underlying issues of yen depreciation [9]

Group 1 - The Swiss National Bank (SNB) has lowered the benchmark interest rate by 25 basis points to 0% in response to weak inflation, the appreciation of the Swiss franc, and uncertainties from U.S. trade policies, marking the sixth consecutive rate cut since March 2024 [1][4] - Switzerland's inflation rate fell to negative territory in May for the first time since 2021, with economists predicting an average inflation rate of only 0.3% in 2025 and 0.6% in 2026 [1][4] - The strong Swiss franc has been driven by increased safe-haven demand following U.S. tariffs announced in April, leading to an 8% appreciation against the U.S. dollar, which could negatively impact domestic inflation and exports [4][5] Group 2 - The SNB's decision to lower rates aims to prevent further appreciation of the Swiss franc, which could harm exporters and exacerbate low inflation [4][5] - The current benchmark rate of 0% returns to the level seen in September 2022, after the end of a seven-year negative interest rate policy, raising discussions about the potential reimplementation of negative rates [4][5] - The SNB is cautious about reintroducing negative rates due to the challenges they pose to various economic participants, including savers and pension funds, and is considering all options, including foreign exchange market interventions [5][6] Group 3 - The global economic outlook remains uncertain, with potential trade barriers that could further slow growth, although stronger fiscal policies may provide unexpected support [5] - The SNB is under pressure to balance its monetary policy without being labeled a currency manipulator, especially in light of past U.S. scrutiny [5][6] - Political considerations suggest that the SNB should remain cautious and avoid appearing eager to reintroduce negative rates, which could have broader implications for its economic strategy [6]