Summary of a speech delivered by Hans Meyer, Chairman of the Governing Board

In his review of major developments in 1997, the Chairman of the Governing Board, Hans Meyer, first discussed the economic situation and monetary policy and then elaborated on the financial crises in East Asia, the reform of the monetary constitution, the new concept for cash transactions and the revised distribution of National Bank earnings.

The still largely export-driven recovery gradually began to spread to the domestic economy in the past year. Nevertheless, it remained weak. The main concern was thus the development of exchange rates. By expanding liquidity, the National Bank counteracted the trend towards an excessive appreciation of the Swiss franc, a trend that increased in the wake of the East Asian crises. The financial crises in East Asia demonstrated that a sustained economic development in a regional as well as in a global context is only possible if individual countries are socially and economically stable. The reform of the monetary constitution has made significant progress. The Federal Council's proposal for a new monetary article, based on a report drawn up by the group of experts, met with a predominantly positive response in the consultation procedure. In the cash sector, the growing concentration of cash flows called for a centralisation of cash processing at the two head offices and two branch offices. The remaining branch offices, however, will continue to be entrusted with the tasks of providing information on central bank policy and keeping up-to-date on the regional economic situation. In accordance with a new agreement with the Federal Government, the National Bank will raise profit distribution to an annual amount of Sfr 1.5 billion in the period 1998-2002. This has become possible since the partial revision of the National Bank Law of November 1997 has created more leeway for investment, and this in turn will lead to higher earnings while current provisions clearly exceed the targeted level.