The conditions for an optimal currency area have probably not yet been met. But the currency union will develop further. For large parts of the Swiss economy, the euro facilitates business. The Swiss export sector benefits from lower transaction costs. Currency devaluations, which were previously implemented by some European countries so as to improve their competitiveness, are now a thing of the past. In addition, Swiss monetary policy profits from the existence of a large economic bloc in Europe that pursues similar goals as Switzerland in terms of monetary policy. The exchange rate of the Swiss franc is likely to remain more stable against the euro than it used to be against the former currencies of the EMU members. However, exchange rate fluctuations must still be reckoned with, as the events after the terrorist attacks in the US demonstrated. As a result of the introduction of euro notes and coins, the euro will be used increasingly as a means of payment in the tourism sector as well as in foreign trade. However, the euro will not become a parallel currency. In Switzerland, employment and loan contracts will continue to be concluded mainly in Swiss francs. The same applies to domestic payments. The SNB's monetary policy concept will remain unchanged: in other words, the SNB will continue to conduct an independent monetary policy oriented to price stability and the needs of the Swiss economy. As a consequence, Switzerland is likely to retain its lower interest rate level. Exchange rate targets are incompatible with the SNB's mandate.
Evolution of Monetary and Exchange Rate Policy in Sri Lanka and the Way Forward by  Dr. P. Nandalal Weerasinghe1 Senior Deputy Governor Central Bank of Sri Lanka  I am deeply honoured to have been invited to deliver the Olcott Oration 2017 and to join a list of great Anandians who have delivered this Oration before. I cannot think of a greater honour that my school could confer on me. I accepted this invitation with humbleness, with gratitude and respect, and with great pride. Let me also take this opportunity to appreciate the support and guidance I received during my school career at Ananda College. The guidance our teachers gave us laid the foundation for any success later on in our lives. My oration today, is on the rather technical topic of monetary and exchange rate policy. The biggest challenge that I have to face is to present such a topic to an audience with a majority who might not be familiar with the technical jargon involved. However, I will attempt to keep the discussion as simple as possible. Central Banking and Price Stability The prime responsibility of any central bank around the world is to maintain price stability by way of maintaining low and stable inflation on a sustainable basis. At the outset, I would like to discuss why low and stable inflation is important for growth and stability of the economy. Based on experiences of many countries and different time periods, we have seen varying levels of inflation.