Impact of the subprime crisis on the Bank

Question discussed at the 2008 general meeting

So far, the subprime crisis has had no negative impact at all on the Bank’s net worth: on the contrary, the increase in the supply of liquidity to the banks has augmented the Bank’s results via the additional interest income, while the credit risk is minor since the loans are backed by collateral satisfying very strict quality criteria.

Moreover, most of the Bank’s reserves are invested in government debt securities, which recorded an increase in their market value when investors switched their high-risk asset positions in favour of more secure investments such as public loans, in a flight to quality.