Freedom of movement of capital is now the rule between industrialised countries and is also becoming more widespread in emerging countries. This makes it easier for the deficits of one group of countries to be financed by the surpluses of the others. In itself, the greater efficiency of financial markets is an additional factor contributing to growth, and is therefore a good thing. However, it is still possible that the continued indebtedness of some countries (due to the substantial disparity in national savings efforts) could dangerously weaken financial markets in the event of a crisis of confidence. The stability of global financial markets last year was a positive factor for our country, with its manifold connections to the global economy and a currency that has often suffered from external monetary turbulence. However, this high level of market stability should not be regarded as permanent. There are still major underlying risks and there is no justification for diminishing our vigilance as regards possible market instability. Meanwhile, companies need to remain cautious about exchange rate risks, despite the fact that the volatility of the Swiss franc has been low over the past few years. For its part, the SNB is aware of the vulnerability of financial markets and takes particular care to ensure that its monetary policy is properly understood by economic agents. We command a high level of credibility because of the attention we pay to communicating our decisions and the monetary stability results achieved in our country. This makes our interest rate policies very effective.

Consequently, we will continue to implement the strategy of monetary normalisation pursued since June 2004. We will be doing so in the conviction that a preventive approach is much less painful for our economy than belated corrective measures. While the resumption of growth is heartening, we should not rest on our laurels since the expected figures are still lower than those needed to cope with the increasing financial requirements of our aging population. Much still needs to be done to raise potential growth in our economy. The proposals on liberalisation of the domestic market that have been put to the Federal Parliament by the Federal Council are a step in the right direction. Additional reforms should be planned, with the objective of stimulating internal competition and reducing the level of market regulation. It is certainly worrying to see our country's frequent low ranking in terms of the indicators that measure market liberalisation. The vitality of countries that have created more room for private initiative should serve as an inspiration to us. Given the healthy state of our economy, the timing is excellent for pursuing a programme of economic reform. We would be making a grave mistake if we declared ourselves content with the results we have already achieved. By ensuring price stability, the SNB, for its part, creates an environment that favours both general economic expansion and structural adjustment. Stable financial markets 2005 was a year of great uncertainties, with the surge in oil prices, disruptions to refining capacity in the United States, and geopolitical tensions.