The spider diagrams used in the WEF Competitiveness Report show the main pillars underpinning the competitiveness landscape (cf. chart 4). These include the level of education, the stability of political institutions, legal certainty, labour market flexibility and the quality of infrastructure. A further prerequisite for companies’ ability to innovate is a stable macroeconomic environment – in other words, a stability-oriented monetary policy and a sustainable financial policy. Price stability and sound public finances make it easier for companies to plan, especially as regards investment. This is where the SNB comes in. According to the National Bank Act, it is responsible for ensuring price stability, while taking due account of economic developments. By fulfilling this mandate, the SNB makes a major contribution to a stable macroeconomic environment, and hence indirectly to the competitiveness of the Swiss economy (cf. chart 5). 2 From a historical perspective, the SNB has successfully fulfilled its monetary policy mandate. Long-term average inflation is lower and less volatile in Switzerland than in most other countries (cf. chart 6). As a result, the Swiss franc has lost less purchasing power over time compared to other currencies. The generally stable economic and political environment in Switzerland is one of the reasons why the Swiss franc is popular with investors and has a tendency to strengthen. Thus, a financial and monetary policy that successfully contributes to macroeconomic stability is both a basis for competitiveness on the part of Swiss companies and a driver of Swiss franc strength (cf. chart 7).

Within the Federal Reserve, we have worked very hard to raise the resilience and security of our own operations. We have made major investments to enhance the back-up facilities for Fedwire. We hold ourselves to very high standards, subject our systems to exacting contingency tests, and coordinate these efforts closely with other U.S. payments systems. We are also continuing to work on ways to improve the security and availability of the telecommunications network that is so vital to the functioning of the financial sector. A private sector group sponsored by the New York Fed, the Payments Risk Committee, has enumerated best practices that financial institutions and payments utilities can adopt to avoid telecommunications outages and to facilitate rapid recovery should an outage occur. We are also working closely with the telecommunications industry, through the Alliance for Telecommunications Industry Solutions, to help improve network diversity and avoid single points of failure for voice and data lines. Payments risk challenges facing system participants The reliability of a payments or securities settlement system depends not just on the system’s design and operation, but also on the quality of the risk management exercised by the participants themselves. The combination of individual and collective efforts to manage exposures, a discipline that must be performed both by the participants and the system operator, is necessary to achieve reliability. The increased specialization of the back office operations of the largest financial institutions makes this challenge more difficult to meet.