In an acute crisis situation, the availability of sufficient liquidity, together with a strong equity position, is absolutely crucial. Fourth and finally, I would like to mention that, in the Swiss franc money market, repo business via the Swiss Value Chain has proved to be a crisis-resistant source of liquidity, thanks to the consistent minimisation of risks. The repo market allows participants to undertake rapid refinancing in the interbank market, independent of credit limits, thereby making a major contribution to the stability of the financial system. That is why it is important for the SNB that all Swiss and foreign banks operating in the Swiss franc money market join the Swiss repo system. BIS Review 150/2007  3  4  BIS Review 150/2007  BIS Review 150/2007  5
Underlying price pressures in the euro area are expected to remain subdued, reflecting the broad-based weakness in aggregate demand and the modest pace of the recovery, as well as subdued monetary and credit dynamics. Medium to long-term inflation expectations continue to be firmly anchored in line with price stability. The risks to the outlook for price developments are expected to be still broadly balanced over the medium term, with upside risks relating in particular to higher commodity prices as well as stronger than expected increases in administered prices and indirect taxes, and downside risks stemming from weaker than expected economic activity. The ECB’s monetary policy stance continues to be geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability. It thereby provides support to a gradual recovery in economic activity. Looking ahead, our monetary policy stance will remain accommodative for as long as necessary. In line with the guidance provided in July, the Governing Council expects the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation is based on an overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the economy and subdued monetary dynamics. In the period ahead, the ECB will monitor all incoming information on economic and monetary developments and assess any impact on the medium-term outlook for price stability.