After what has been said, all will depend on whether the participating countries can muster the discipline indispensable for sustained and convergent stability-oriented policies. In the context of the run-up to monetary union, significant progress has been made in individual countries. Inflation has been brought under control. Budgets have been brought in line with lasting effect. Both achievements did not fail to have a positive impact on the development of interest rates. In view of the challenges that lie ahead, one must bear in mind that with the fixing of exchange rates, individual countries have forfeited an element of flexibility. In the past, imbalances in economic development were compensated with flexible exchange rates. Losing this possibility is significant, because many countries already lack the capacity to adjust. We note with satisfaction that the monetary concepts of the European Central Bank are largely in conformity with our own. The chances are thus good that this will result in a sustained convergence of stability-oriented policies and, as a consequence, basically stable exchange relations between Switzerland and the new European currency area. Should, however, difficulties arise when the present goals are implemented, we would have to expect some turbulence. This would be likely to result in an upward pressure on the Swiss franc. The National Bank would, of course, have the possibility of relaxing monetary policy to counteract such a trend. This might, however, conflict with our policy’s orientation towards stability. The basic considerations on monetary policy outlined here also apply if we look beyond the European environment.

The crisis-like developments in East Asia, Russia and Latin America may have their characteristic features in individual cases. However, they also give rise to a number of comments of a more general nature. Imbalances in economic development, weak financial systems and insufficient supervision of financial markets are merely symptoms of deeper-lying causes. In any case, most recent experiences tend to confirm the opinion that a sustained economic development is only possible on the basis of social coherence. Individual countries themselves bear the responsibility for creating this stability. In the long run, outside help can only be meaningful if it is granted as help towards self-help. These remarks are equally relevant for assessing the activity of the International Monetary Fund. The chief task of this important institution in the area of international monetary policy is advising its 3  BIS Review 106/1999  members in the conduct of economic policy. This is designed to create favourable preconditions for a positive development of international monetary relations and, of course, also the world economy. The second task is to provide credit facilities in order to support the necessary processes of adjustment. Since its inception, the International Monetary Fund has thus held an intermediate position between emphasising the self-responsibility of a country and granting adjustment aid. Its task is not made any easier by the fact that it has no possibility of enforcing recommendations. Whenever difficulties arise in shaping international monetary relations, a call is made for introducing fundamental reforms.