The environment in which the Swiss National operates has changed dramatically during the last few years. It is characterised by liberalisation, deregulation and an ever-increasing global interconnection. The resultant fundamental changes have affected both the product markets and the financial markets, with the changes in the financial markets having been even more dynamic. There is good reason to assume that this process will continue in the years to come or that it will even be more pronounced.

In addition to this general trend, a significant change has also taken place in Switzerland's concrete monetary environment. It is just over a year now since the euro was launched in our neighbouring countries. The introduction of the single European currency poses a significant challenge for Switzerland in that our currency and our economy operate in a European environment that has become radically different.

In terms of economic policy, the growing international integration means that the short-term development of an economy can now be steered to an even lesser degree than in the past. Favourable conditions are more important today than ever for a country to hold its own amid tougher global competition. By pursuing a policy geared toward monetary stability, the National Bank makes the best contribution for our country to prosper in the long term. In an environment where changes occur almost on a daily basis, price stability is an especially important constant factor.

Price stability can best be guaranteed if the central bank is able to act free from political pressures and if it is not confined by the constraints of a fixed exchange rate. These preconditions are currently present in Switzerland. At the same time, however, the changes in the context of monetary policy call for certain adjustments in its concrete implementation. In our new monetary policy concept, the increased transparency stands out. By publishing an inflation forecast and setting a target range for the three-month rate, we are breaking new ground, thereby meeting the demands of the market for a more efficient communication of our assessments and intentions. By embracing these innovations, we also take a certain risk. It remains to be seen how the market will deal with this new information situation. The National Bank, however, is confident that the new concept will prove to be successful in practice.