In addition, there are increased concerns about financial and foreign exchange market stability in the event of a sudden reversal of capital inflows to the regional banking system. Recently dramatic changes are occurring in the global economic environment, including continuing monetary policy normalization by the U.S. Federal Reserve. These changes can potentially impact small, open economies and must be understood. Research conducted by the central Bank of Italy (BdI) is another example of research work, focused on the region, providing an interesting regional perspective for euro area policymakers regarding their policy decisions and actions. This research has formally provided researched-based evidence on the implications of their policy making on the large group of countries in the periphery of the euro area. These are just a few examples of interesting, useful and publishable research. This year we have a couple of projects that involve cooperation and joint works between Bank of Albania researchers and those from other central banks or academia. This is another way to increase the potential for publication and I would encourage you to increase the amount and scope of cooperation in research with foreign researchers. To conclude, I would like to reemphasize that we must enhance the overall efficiency of the transmission mechanism, and the resilience of the banking and financial systems so that potential and unexpected shocks do not advance to economic or systemic risk.
Philipp Hildebrand: Financial market turbulence and the economic outlook Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Handels- und Industrieverein des Kantons Bern, BurgdorfEmmental section, Burgdorf, 25 October 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  It is very difficult to assess how the shifts in the credit markets triggered by the US sub-prime mortgage market will impact on the real economy. As a result, the uncertainties with regard to the economic outlook have increased considerably. The evaluation of structured credit products, some of them very complex, is based on models. Because of the difficulties this evaluation poses, the market for such products gradually disappeared. The uncertainty as to the degree of exposure of individual banks in the structured credit market led to illiquidity in the unsecured interbank market. Central banks around the world have reacted to this unusual situation with injections of liquidity. An adequate supply of liquidity to the economy is essential for our economic system to function. A favourable aspect of the situation was the fact that the credit market turbulence occurred at a time when the global economy and the Swiss economy were both in good shape. BIS Review 121/2007  1