As we have demonstrated, the Swiss National Bank is prepared, in a crisis situation, to take exceptionally far-reaching measures to fulfil its mandate. In doing so, the SNB is making its contribution to a favourable and stable business environment and, ultimately, to a continuously prosperous economy. 18  The extent of the real appreciation of the Swiss franc varies depending on the country sample, the deflator and the weighting method. In terms of the real exchange rate indices calculated by the SNB and the BIS using the CPI deflator, the Swiss franc has appreciated between 14% and 15% in real terms since the collapse of Lehman Brothers. The SNB’s export-weighted exchange rate vis-à-vis 40 trading partners shows an appreciation of 14%. 19  Cf. Jean Monnet (1976): Memoires. 8  BIS Review 157/2010
And many of these capital flows are mobilised or indirectly influenced by highly leveraged institutions operating behind a veil of secrecy interlaced with esoteric mathematical models that do not allow the systemic as well as the rather simpler counter-party risks to be identified, let alone properly managed. As recent events in this region and throughout the world have shown, this phenomenon has reached a level where it is capable of disrupting even the largest markets and completely destabilising smaller markets. It will therefore be useful for us to discuss these issues in greater detail before focusing on what needs to be done. International Capital Flows For a long time it has been taken for granted that capital flows are exactly analogous to trade flows: that, wherever they occur, and in whatever form, they invariably benefit long-term economic development, and that therefore the looser the rein they are given, the greater the benefit. This presumption, however, has been questioned recently in light of the experience of some emerging market economies. Professor Bhagwati, for example, in his article last year on “ The Capital Myth” , has argued that the assumption that free capital is as virtuous as free trade is wrong and that the claims of enormous benefits from free capital mobility are not persuasive. There are undoubtedly many benefits that go with free mobility of international capital. Traditionally, capital flows take the form of commercial bank lending, foreign direct investment, or equity portfolio investment.