government will thoughtfully address this issue. the synergy between an appropriate policy mix and a well - built coordination will undoubtedly bring inflation to its target of 5 % ±1 % in 2011 and 4, 5 % ±1 % in 2012. 38. in my capacity as a monetary authority, i would like to reemphasize that bank indonesia is still very much committed to direct the bi rate to reach the medium term inflation target which is in the range of 3. 5 %. the setting of the bi rate is formulated with excise measurement so that inflation and expected inflation will move towards the corresponding target without sacrificing economic growth. 39. i have strong believe that by the official establishment of the asean economic community by 2015, we can achieve the medium term inflation target hence bring our inflation rate to the level of neighbouring countries in the region. a low and stable inflation accompanied with improvements to various structural impediments will support the indonesian economy which is estimated to grow by 7. 5 % by 2015. distinguished guests, ladies, and gentlemen, 40. the picture of our state of economy which i have just portrayed is still prone to a number of global and domestic risks. the global economy will continue to move dynamically in its search for equilibrium. however, this process may well be described as an indefinite search within a dark and never ending tunnel. 41. an imbalanced global economic recovery, a persistent debt crisis in the peripheral european area, signs of economic overheating in emerging markets, and extreme climate change and its impact on food prices are still considered as risks that may affect the stability of the global financial market in years to come. the dynamics of the global financial market can have an immediate impact to indonesia as we currently have a relatively open financial market. our first challenge is how, on the one hand, we can strengthen our domestic financial system while, on the other hand, reap the benefits of this relatively open market, including efforts to deepen our market. bis central bankers ’ speeches 42. based on my observation, efforts to deepen our financial market are moving on a relatively slow track. in this context, the strengthening of the domestic investor base must be a priority so that the dynamics of our financial market is not solely dependent on changing global investor risk appetite. furthermore, we may no longer have to fear the risk of capital reversal. in this opportunity, i welcome efforts made by the ministry of finance and the ministry of state owned enterprises on their cooperation to

philipp m hildebrand : ten theories on the economic relationship switzerland europe summary of a speech by dr philipp m hildebrand, member of the governing board of the swiss national bank, to the arbeitgeberverband basel, basel, 8 september 2004. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the relationship between switzerland and the eu is close in so many ways that it appears almost stronger than that among many member states themselves. the debate on a possible integration into the eu as a logical consequence should be as broad - based as possible. economically speaking, the issue has become more pressing since the introduction of the euro, as switzerland is now surrounded by a single - currency area. switzerland ’ s weaker economic growth is also frequently quoted as an argument in favour of integration, since the necessary domestic structural reforms would then be easier to realise. however, one tends to overlook the fact that the national authorities would continue to be responsible for implementing reforms and that, moreover, the absorption potential of autonomous monetary and fiscal policies would be forfeited. even with an independent policy, switzerland is in a position to outperform if it again focuses on its strengths of flexibility and openness. the independent monetary policy has helped to keep inflation in switzerland at a low level for decades. this and the diversification properties of the swiss franc make capital cheaper in switzerland by approximately 1. 5 percentage points ( interest premium ). exchange rate volatility vis - a - vis the euro area has declined, while it would continue to exist vis - a - vis the us dollar even after integration. the as yet more flexible labour market ushered in by the transition period ii of the bilateral agreements i is the flagship of swiss economic policy. it keeps unemployment and the resultant national costs low in the long term and strengthens the incentives for individual performance. it is essential to translate openness and flexibility, also with respect to internal structural reforms and external relations, into autonomously implemented reforms and a practical global orientation.