The conditionality imposed on IMF financial support was associated with the application of “shock therapy” to Asian countries’ financial sectors: losses had to be written down immediately, banks were closed or sharply restructured and many institutions were sold to foreigners, arguably at “fire sale” prices. Within the euro area, various buffers – not least, the Eurosystem’s provision of liquidity support – have tempered the stresses in the financial system. This reflects the recognition that, within such a deeply economically and financially integrated region, “shock therapy” adjustments may, through spillovers, weaken the financial system in other parts of the euro area. However, we must also ensure that such liquidity support to the banking sector does not delay or hinder the fundamental reforms required to address the underlying weaknesses the financial crisis has revealed. In the end, the crisis-hit countries have no alternative: they have to make fundamental reforms to their banking systems, involving substantial restructuring and, in some cases, very significant downsizing. Liquidity support can help to reduce adjustment costs by smoothing the transition. But those costs should not be used as a pretext for delay. 5. Concluding remarks  Financial markets are testing the strength and resilience of the euro area and the willingness and ability of the euro area authorities to preserve the integrity and stability of the euro as a currency. The institutional response to their challenge has been swift, strong and resolute.
I would then like to turn my attention to the subject of gold as part of our currency reserves. But first, let me begin with the key events in monetary policy. Key events in monetary policy in 2012 and 2013 More than 20 months have passed since the SNB introduced the minimum exchange rate against the euro under exceptional circumstances. In summer 2011, the Swiss franc had appreciated to such an extent that we had to take action. It is the SNB’s statutory mandate to ensure price stability, while taking economic developments into account. With money market interest rates already close to zero and conventional monetary policy options exhausted, we would have no longer been able to fulfil this mandate without the introduction of a minimum exchange rate. In taking this step, the SNB averted the threat of adverse developments to price stability and the Swiss economy. The minimum exchange rate provided the foreign exchange market with clear guidance and gave companies a sounder basis for their investment planning. Notwithstanding the minimum exchange rate, conditions for the Swiss economy remained difficult in the past year. Global economic growth weakened, after having already lost momentum the previous year. This slowdown was mostly due to the deterioration in economic activity in emerging economies and to the recession in the euro area. Although the European financial and debt crisis is weighing particularly heavily on the euro area economy, it is also curbing growth in other regions.