Finally, I shall elaborate on the new National Bank Law. Economic activity In Switzerland, a turnaround in economic development emerged in the third quarter of 2003. Real GDP exceeded the previous quarter’s level for the first time since the third quarter 2002. Nevertheless, it still fell short of its year-earlier level. The Swiss economy recovered largely in line with our expectations as communicated in our September assessment of the situation. The recovery is attributable to the pickup in global economic activity, low interest rates and generally more favourable exchange rate conditions. This benefited primarily exports, which rose markedly in the third quarter. Equipment investment, too, picked up slightly following a long phase of decline. Private and government consumption continued to have a stabilising effect. The economic situation in Switzerland should improve further in the next few months. We are expecting exports to continue developing favourably, coupled with a robust increase in equipment investment. In this way, the economic upswing in Switzerland will become increasingly broad-based and strengthened. In the course of 2004, unemployment should also fall, leading to a pickup in private consumption. On average, a moderate decline in economic activity will be recorded in the current year, while for 2004, as already stated, we expect the economy to grow by slightly over 1.5%. This will, however, not yet suffice to close the production gap. Production capacities will therefore still not be fully utilised in the coming year. Even though the overall prospects have clearly improved, the situation in a number of industries remains difficult.

The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, as money and credit growth continues to slow down. Against this background, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. Let me now explain our assessment in greater detail, starting with the economic analysis. Available data and survey-based indicators continue to signal an improvement in economic activity in the second half of this year. In particular, the euro area should benefit from the inventory cycle and a recovery in exports, as well as from the significant macroeconomic stimulus under way and the measures adopted to restore the functioning of the financial system. Taking into account all available information, in the second half of this year, quarterly real GDP growth rates could be back in positive territory. However, uncertainty remains high as a number of the supporting factors are of a temporary nature. Looking through the volatility of incoming data, the euro area economy is expected to recover at a gradual pace in 2010, as it is likely to be affected over the medium term by the process of ongoing balance sheet adjustment in the financial and the non-financial sector, both inside and outside the euro area. In the view of the Governing Council, the risks to this outlook remain broadly balanced. On the upside, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken.