Furthermore, the euro area also has the problem that there is a large spread in inflation between the peripheral countries and the countries at the centre. In striving for an inflation rate of less than, but close to, 2% in the medium term in the entire euro area, the ECB is trying to prevent inflation in the central countries from being pushed down towards zero, or even below zero, for any length of time. In Switzerland, this problem does not exist as only inflation measured in Switzerland is relevant for our monetary policy. BIS Review 27/2003  3  Additional agreement between the Federal Department of Finance and the SNB on the distribution of profits on the free assets At yesterday’s meeting the Bank Council of the National Bank agreed to an additional agreement between the Federal Department of Finance and the Swiss National Bank on the distribution of profits on the free assets (income on reinvested proceeds from gold sales). The profit distribution of the National Bank will thus increase by Sfr 300 million to a total of Sfr 2.8 billion (for the financial year 2003) in spring 2004. In 2005 and 2006, it will be gradually raised up to Sfr 3 billion. The National Bank’s profit distribution has so far not taken account of this income on reinvested gold proceeds.
One of the first priorities of the Supervisory Board has been to promote integration through harmonized implementation of Options and National Discretions (ONDs), thereby evening the level playing field in the euro area. Regarding liquidity requirements, the Single Supervisory Board can grant waivers at national as well as cross-border level on a case-by-case basis. In the current institutional context, where the free flow of liquidity within the same banking group but across border could be impeded, a prudent supervisory approach has led the ECB’s Supervisory Board to still maintain a floor on the liquidity requirements of significant subsidiaries. Overall, the banking landscape still resembles too much a collection of banking systems highly exposed to their domestic economies, with limited cross-border private risk-sharing. At the same time, one should recognise that the Banking Union is both an objective and a process of fundamental structural changes in the euro area’s financial architecture. The next steps are 1/2  BIS central bankers' speeches  clearly set out in the ECOFIN roadmap to complete the Banking Union. It is now urgent to agree on an ambitious timetable for its implementation. 2/2  BIS central bankers' speeches