However, the impetus for take-off inevitably had to come from outside. Our economic problems were, and still are, neither confined to a sector nor a region. The line separating positive and negative developments runs right across the economic landscape. It is still quality of performance, characterised by innovation, flexibility and productivity, which determines success. Consolidating public finances remains important. Furthermore, efforts to promote competition must continue even though considerable progress has already been made. In this context, we have to realize that in many quarters, people are obviously sceptical about the concept of competition. The argument has not yet sunk in sufficiently that when it comes to allocating resources, the free play of market forces is well suited to achieve prosperity and economic welfare. This, however, is only possible within a framework of general economic stability. One of the most gratifying recent developments is a steady decline of unemployment. Since imbalances in the labour market continue to exist, we must foster both know-how and motivation. Sufficiently flexible working conditions and greater mobility are also essential. Finally, it is important to remember that securing the right macroeconomic environment and its exploitation by people participating in the economy is an ongoing challenge. Consequently, there are no quick, simple or cheap solutions for the problems confronting us. Monetary policy The Swiss National Bank has the task of conducting a monetary policy in the interests of the country as a whole.

Aside from economic and operational efficiency, exercising political discretion is indispensable. At the same time, it is clear that growing international involvement restricts the room for manoeuvre. More recently, endeavours by the European Union to close loopholes by taxing interest earnings on capital invested in countries other than the tax domicile have gained attention. Under discussion is a choice between a withholding tax and a reporting obligation. At this juncture, a consensus within the EU is not yet foreseeable. Clearly, a convincing solution would have to include all major financial as well as off-shore centres. If that becomes possible, we would hardly be able to refuse to cooperate in the field of withholding tax. In the event of a comprehensive solution, the effects should be within acceptable limits from a general economic perspective. Finally, attention must be drawn to the organisational and technical infrastructure as an element of the general environment. In this respect, conditions in Switzerland are favourable. Technologically advanced and in some areas pioneering solutions guarantee quick, safe and cost-effective business transactions. This is of great value for the integrity, stability and quality of the financial centre even if the respective activities are largely hidden from the public eye. Apart from the relevant factors already mentioned, the development of financial transactions will be influenced to a considerable degree by changing customer needs and technological innovations. As regards customer needs, changes in savings and investment habits of private and institutional customers must be pointed out.