Switzerland as an independent monetary zone  As is the case in most countries today, the Swiss National Bank pursues a monetary policy that is independent of the political authorities. We regard this independence as a key prerequisite for a successful policy. Our main goal is to maintain price stability. Thereby we create the basis for rational investment and expenditure decisions, and we contribute to a balanced economic growth. Price stability has been the traditional objective of our policy for decades, but our monetary strategy had to be adapted to changing circumstances. Following the transition to floating exchange rates some 30 years ago, monetary policy was based on the control of the monetary aggregates. We had to fight against inflation by far exceeding today’s levels. Inflation could be sustainably reduced in the second half of the 1990s, although the monetary aggregates became increasingly unreliable as monetary indicators. Monetary policy needed to be redesigned. In 1999, we adopted a new strategy based on three elements: ·  The first element is an explicit definition of price stability: price stability is achieved when inflation, as measured by the consumer price index, is less than 2%. We want to achieve this objective over the medium term since controlling inflation on a short-term basis would translate into high costs to the national economy. A monetary policy geared to medium-term price stability also helps to smooth out cyclical fluctuations.
As supervisors on the Basel Committee have developed standards for the disclosure of components of capital, for loans, and for other topics of mutual concern, we have sought out the views of representatives of the accounting profession. This dialogue will continue. I should add that we are currently seeking new opportunities for discussion on issues of mutual concern with accounting standards-setting bodies and private sector accounting professionals. Conclusion By the end of this conference, I think that we will all have a better sense of our many worthy accomplishments to date in refining the measures and management of credit exposures. At the same time, we will no doubt develop a better understanding of the significant work ahead – in terms of developing more sensitive capital requirements, but also in terms of advancing our ability to control the risks we face. With regard to the New Accord itself, the issues and themes you will discuss at this conference suggest that we’ve moved beyond a discussion of the principles behind the rules to a focus on preparing for their implementation. This seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the New Accord, supervisors and the industry will be ready to implement the new rules by the end of 2006. Indeed, banks that wish to be among the first to adopt an advanced approach to credit risk should already have begun to gather and process the data that is key to the IRB approach.