In defining the purposes of the IMF in Article I to be, among other things, “to promote international monetary co-operation”, the term “consultation and collaboration on international monetary problems” is used. So it would be appropriate to describe that same monetary end as the prevention and cure of monetary problems. Indeed, the rapid pace of financial liberalization and the associated globalization of financial markets have meant that monetary problems, when they arise, can be highly contagious on the global and particularly on a regional dimension. And if they are to be properly handled, by way of prevention or cure, there is a clear need for international monetary co-operation. 6. As to who should be working together, it is quite obvious that the interested parties would necessarily include the monetary authorities of economies facing or potentially exposed to monetary problems. The increasing realization of this need to work together has led to the formation of various, mostly regional, forums where monetary authorities gather to discuss issues of common interest. BIS Review 91/1997  -2-  7. Insofar as the Asian region is concerned, these forums are proving to be quite useful, but there is regrettably also some resistance in making further and the much needed progress because of, believe it or not, turf issues between ministries of finance and central banks, or perceived excessive rivalry on the part of individual economies in vying for the lead and influence in the co-operative effort.
Consequently, Switzerland – unlike other countries – was able to avoid introducing state-guaranteed bonds. With the drastic reduction in key rates and the subsequent decline in mortgage rates, the burden on households and companies was eased. In this way, the severity of the recession was somewhat alleviated and the risks of deflation reduced. However, the interest rate is now at a historic low and this means medium-term risks for the Swiss real estate market and financial stability. Experience shows that periods of low interest rates provide scope for excesses on the mortgage and real estate market. Consequently, in the current environment in particular, attention should be given to ensuring that past mistakes are not repeated. Caution must remain the watchword when granting loans. BIS Review 140/2009  1