The globalisation of the financial markets and the emergence of a single currency in Europe represent significant challenges for the policy of the Swiss National Bank. Free, cross-border financial flows are a reality, the flow of information is global, and the electronic media permit permanent arbitrage. In Europe, the unified monetary landscape has led to a new and unique situation in that Switzerland now finds itself in the heart of a currency area in which it does not participate. Even more than in the past, the markets are now in a position to penalise inappropriate or seemingly inappropriate policies by corresponding reactions.

The National Bank meets these challenges by reinforcing its efforts at transparency. This is also the thrust of innovations in the implementation of monetary policy introduced at the beginning of this year.

In striving for increased transparency we have been led to quantify the goal of price stability and to elucidate our monetary policy course by announcing a target range for the three-month interest rate. Furthermore, we regularly publish our assessment of the economic and monetary situation as well as our conclusions for monetary policy. In this way, we enable the public to understand and judge the measures introduced by us. We hope this will boost efficiency in the conduct of our policy and bring about a more rational reaction by the markets, i.e. a strengthening of our ability to take the necessary measures for maintaining price stability in Switzerland.

Up to now, our monetary experience in a global environment has been encouraging. Despite fully integrated markets and completely free financial flows, the Swiss franc's fluctuations are acceptable. The exchange rate reflects the relative development of the fundamentals of the Swiss economy. This applies in particular to the exchange rate between the Swiss franc and the euro. Fears of the effects of financial globalisation and European integration crippling Swiss monetary policy have thus not been substantiated.