Within this context it is relevant to note that while in general accession countries have made significant progress towards achieving macroeconomic stability, this progress has been far from uniform and challenges remain in this respect too. The paper to be given by Dr Lipschitz and the presentations on EU country experiences should provide some interesting perspectives on these issues. The relevance of transparency and good governance also applies at the corporate level, not least because financial difficulties in large corporations could undermine the well-being of individual financial institutions and markets. This is especially the case in small jurisdictions. Now it is a fact that corporations will always know a lot more about their financial position than any outside entity charged with monitoring them, and financial intermediaries are no exception in this regard. This is particularly true at a time when the complexity of financial products and the intensity of cross-market risks are stretching the capacity of central bankers and supervisors to remain fully in control. Several recent episodes in the financial world indeed confirm that the innate human predisposition to maximise selfinterest can induce behaviour that is not in harmony with the public interest. The implications of this are two-fold. While rules and regulations continue to play an important role in preventing systemic shocks, they will increasingly have to incorporate incentives and credible deterrents to discourage excessive risk-taking and moral hazard.
Philipp M Hildebrand: Economic outlook and monetary policy Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, Apéritif Marché monétaire, Geneva, 17 November 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy has benefited from a favourable international environment. Activity has remained strong in the US, whereas it has improved in Japan and, more recently, in Europe. In Switzerland also, the latest indicators point towards stronger growth. Exports remain the engine of the recovery but private consumption has also picked up. However, consumer confidence remains fragile in the context of only modestly improving labour market conditions. The SNB expects the economic recovery to continue. A sudden adjustment of the US current account imbalance or a further increase of energy prices are predominant risks. From a monetary point of view, the current situation is characterised by different counteracting forces. On the one hand, the economic outlook is positive. On the other hand, some risks put this favourable picture into perspective. Furthermore, the increase of energy prices might endanger medium term price stability at a time when monetary conditions remain expansive. Last but not least, globalisation continues to hold down the prices of many goods. In this complex environment, it is important that central banks succeed in preserving their most important monetary asset, namely well anchored inflation expectations.