Even so — or perhaps as a consequence of this — the euphoria led to growing imbalances. The rapidly rising stock markets in the late 1990s seem to have stemmed from unduly high expectations of future profits and incomes. Partly in view of equity capital’s appreciation, households stepped up their expenditure on consumption in excess of current income. Corporate investment expanded rapidly to meet the growing demand. High share prices stimulated the procurement of venture capital and generated a plentiful supply. The growth of demand and the expansion of the U.S. economy’s supply side were proceeding at a rate that was based on expectations that simply could not be fulfilled. American households pledged future incomes for current consumption to such an extent that their savings no longer sufficed to finance corporate investment. The saving deficit grew, as could be seen from the rising deficits on the current account, and large amounts of capital had to be imported. The apparently unending increase in expectations of rising share prices on U.S. stock markets stimulated the capital imports, which continued to such an extent that the dollar rose to high levels against other currencies. Together with massive investments in real capital, which involved considerable rationalisation, the dollar’s appreciation held back the price impulses that normally accompany growing pressure from wage costs. The question is whether the upward phase in the U.S. economy in the 1990s represents a cyclical pattern that differs from earlier post-war cycles.

In 1949, the banks started bundling interbank transactions in various clearing houses categorised according to bank type. Thirty years later, in 1979, the data processing systems of these clearing houses were also centralised. This laid the groundwork for the current SIC system, launched in 1987, which has led to the centralisation and standardisation of all Swiss interbank payment transactions via SNB sight deposit accounts. Cf. Fritz Klein and Guido Palazzo, ‘Kulturgeschichte des Geldflusses. Die Entwicklung des Zahlungsverkehrs mit Fokus Schweiz’, 2003, Verlag SKV. The G20 countries committed to the principle of settling OTC derivatives via central counterparties at the Toronto Summit in 2010 before passing national legislation on the matter (art. 97 of the Financial Market Infrastructure Act [FMIA] in Switzerland, the European Market Infrastructure Regulation [EMIR] in the European Union, and the Dodd-Frank Act in the US). The terms ‘distributed ledger’ and ‘blockchain’ describe a concept that enables the operation of a distributed, synchronised database. Such a database allows participants to exchange digital assets without involving a centralised third party. Page 4/6  Such new technology is highly relevant for central banks, especially in the context of the ongoing debate about central bank money potentially being issued via a distributed ledger. This idea raises a host of central bank-specific questions that will need to be examined in more detail. The SNB is following and analysing developments in this arena closely and is actively involved in discussions with market participants, regulators and other central banks.