The legal and judicial system must make the rights and responsibilities of both banks and their counterparties clear and enforceable so that banks and borrowers can make the most effective use of collateral, guarantees, and other measures to secure credit. Third, we must confirm that the banking industry is developing a sense of a “culture” of risk management. This is perhaps the hardest criterion to define. To a great degree, Basel II is intended to create incentives for the banks to renew their focus on a risk management culture. At a minimum, countries that seek to apply Basel II must ensure that their banks view risk management not as an exercise in complying with external requirements, but rather as a means for pursuing opportunities responsibly. We must all understand as well that risk management is an art, not a science: it is a way to approach business decisions, but it does not provide automatic answers. Its successful application requires that we constantly improve our skills and our expertise. It demands the use of the best tools and best data available to support our analyses. And ultimately, it requires that we apply our best human judgement to all significant decisions. All of us can take immediate steps to strengthen our financial and supervisory infrastructure along these three areas. We must ensure the effectiveness of our supervisory systems. We must improve the transparency of our markets. And we must promote the development of sound risk management cultures.
The present situation is difficult for the export industry and for parts of the tourism sector. We should not forget, however, that enterprises in the rest of Europe also have to contend with unfavourable conditions. High inflation or calls for massive pay rises, as seen in some countries, may cause production costs to surge. Switzerland as an industrial location remains attractive. Its advantages include low inflation, high social stability, performance-oriented and welltrained employees, trade unions with an awareness of economic correlations, a first-rate public infrastructure and administrative system and, last but not least, a low interest rate level and favourable financing possibilities in a first-class financial centre. The export industry's situation should improve rapidly once the global economy, and in particular the European economy, start to rebound. Experience has shown that the export industry always does everything in its power to further increase its productivity and to remain competitive internationally in the current exchange rate environment. Its efforts must be supported by a strengthening of domestic competition in Switzerland. The export industry will remain a key engine of growth in Switzerland and an essential basis of our prosperity. 2  BIS Review 39/2002  The main ticks on the horizontal axis indicate the beginning of the first quarter of the respective year. The value for each quarter is recorded in the middle of the quarter.