Page 2/8  Monetary policy  With a view to ensuring appropriate monetary conditions, we are continuing to pursue our expansionary monetary policy. This is based on the negative interest rate that banks and other financial market participants are charged on their sight deposits at the SNB and on our continued willingness to intervene in the foreign exchange market as necessary. Both instruments remain essential as the situation is still fragile. While the foreign exchange market has largely shrugged off recent equity market turbulence, circumstances in the financial markets – and thus by extension monetary conditions for the economy – could rapidly deteriorate again. Such a development would be undesirable in the current environment. Inflation is now within the range that the SNB equates with price stability, and capacity utilisation in the economy has continued to improve. Nevertheless, inflation remains low and inflationary pressure is modest despite our expansionary monetary policy. Tightening monetary conditions would be premature at this juncture, and would risk unnecessarily jeopardising the positive economic momentum that has been established. The Swiss economy picked up markedly last year against a positive global economic backdrop. However, we should not let ourselves get carried away. Despite the easing on the foreign exchange market in the past twelve months, both short-term (cyclical) and longer-term (structural) challenges remain. Competition with other business locations around the world remains as intense now as it was prior to the crisis.
The bank-business relationship institutionalisation might assist in resolving a number of issues, which may be challenging to be addressed individually by banks or businesses, be they large ones. The best example is the effort of reducing the informal economy. All present parties in this meeting have expressed their pros to the fight against evasion and informality. In reality, however, the dishonest competition forces many of them to choose the informal means, since, contrary, they will find themselves out of the market. The breaking of this vicious circle could be made possible by a better coordination of our efforts, in order to avoid the so-called free-rider phenomenon, where the dishonest business is given too much room to take advantage of the situation. Hence, I welcome today’s meeting, hoping that it shall not simply remain within the communication context, but rise in a higher level of coordination. 1/1