For example, ASEAN has concluded Free Trade Agreements (FTAs) with Australia, New Zealand, China, Korea, Japan, and India. The ASEAN-China FTA alone covers over 1.9 billion consumers and an estimated trade volume of $ trillion. As Asia grows and comes together economically, global companies that aim to have a share of the pie will have to develop strategies and production models that are customised for Asia. Singapore exists at the confluence of these emerging trade routes within Asia and as well as between Asia and other regions. We have positioned ourselves as Global-Asia hub to take advantage of Asia’s growth. Our strategic location and affinity with other Asian countries made us the location of choice for companies from the West to grow in Asia. In 2011, IBM Services set up an Integration hub here. GlaxoSmithKline too has set up their Emerging Markets & Asia Pacific HQ here to serve the Asian market. At the same time, Asian companies expanding globally often opt for Singapore as their international base. Tata Communications from India has its HQ in Singapore, as do many Chinese companies. To aid these efforts, Singapore has initiatives to attract and develop talent that can thrive globally. For example, in 2010 we set up the Human Capital Leadership Institute to bring talent together to interact with one another and to prepare for the future. Urbanisation and sustainability Second, sustainability challenges will loom larger as the growth of the global economy puts more stress on the environment.
Political processes are often protracted, but once a decision has been taken, results should be rapidly visible. to be available as soon as possible. By contrast, central bankers are able to take decisions very quickly, but the results of these decisions – whether good or bad – may not be evident until years later. It is precisely because this lag is often so long that the credibility of central bankers is essential. If central bankers are credible, economic entities will trust them. As a result, monetary policy is more effective. For instance, if inflation rises due to increasing commodity prices, employees will not immediately ask for higher wages because they are confident that the increase in inflation is only temporary. Thus independence is a necessary prerequisite for a central bank, in order to develop the credibility it requires for carrying out monetary policy. Mind you, independence is a necessary – but not a sufficient – prerequisite for successful monetary policy. Central bank independence in monetary policy is not a specifically Swiss achievement. In many countries it has helped to firmly establish inflation expectations in the long term. Consequently, monetary policy can react to shocks in the short-term, when necessary. However, with a view to certain characteristics of the Swiss economy, the independence of the SNB appears particularly valuable. Allow me to explain this briefly, using our experiences during the financial crisis as my example. When the extreme shock of the great financial crisis occurred in 2008–09, monetary policy was in a position to act rapidly.