clear signs of a shortage on the labor market. stronger growth could thus fuel the well - known wage - price spiral. under these circumstances, a further tightening of monetary policy is a realistic hypothesis. to make things even more difficult, there is a high degree of uncertainty concerning the development of labor productivity in both europe and switzerland. the rise in labor productivity is usually seen as the main factor behind the spectacular performance of the us economy, characterized by high growth and low inflation. will productivity now also start rising in switzerland and europe? where will it rise more? in switzerland, where the labor market is more flexible and structural reforms are more advanced, or in europe, where the large common market and the single currency are expected to break up old structures? we have good reasons to believe that there is a potential for non - inflationary economic growth in switzerland. investment has been strong in 1998 and in the first part of 1999, deregulation and competition have made spectacular progress, large - scale adjustments have taken place in various economic sectors and more flexibility is now accepted in the labor market. some adjustments in the interest rate have been made in order to restore a more neutral monetary stance. in one word, the degree of competitiveness of our economy is stronger today than it was 5 or 10 years ago, production capacities have not been fully exhausted and monetary conditions have been adjusted. switzerland will thus benefit from the recovery in europe without major risk of inflationary pressures. indeed, the assessment of the future stability in the exchange rate between the swiss franc and the euro depends crucially on what will happen in switzerland and in the surrounding countries. if the convergence in fundamentals goes on, the exchange rate should remain relatively stable ; otherwise some adjustment will be needed. i am convinced, however, that the exchange market will not behave irrationally. following the pattern of the dm / sf relationship of the past, it will not depart substantially from what fundamentals would suggest. 3. 2 political uncertainties what about the political factors influencing the exchange rate? i would like to mention here two major themes that could possibly affect the relation between the swiss franc and the euro. the first factor is the uncertainty about switzerland ’ s future policy towards europe. as you may know, the swiss people rejected switzerland ’ s membership in the european economic area ( eea ) in december 1992. this vote was regarded as an anti - eu signal by the government, which has since then shelved its plans for adhesion to the eu

is to make the libor more representative and to restore the trust of market participants. aside from these regulatory bis central bankers ’ speeches steps, what is also vital for the continued existence of the libor is that an adequate number of banks participate in the libor fixing, and that the money market upon which the libor fixing is based recovers its importance. credible and representative reference interest rates are of major importance for the financial markets. they serve as benchmarks in the pricing of loans, financial products and derivatives. in switzerland, approximately 80 % of banks use the libor as a benchmark for loans, especially for mortgages. the responsibility for the provision of reference interest rates therefore lies primarily with the market participants. they should be aware of this responsibility, and become involved, where necessary, in exploring alternative reference interest rates. the snb is playing a supportive role in this regard, in that it is participating in discussions with market participants, as well as with swiss and foreign authorities. future of the repo market infrastructure in switzerland with regard to repo market infrastructure, it is important that we are well prepared for the future. a functioning, secure and efficient repo market is vital for the implementation of monetary policy, as well as for market participants ’ access to central bank liquidity. switzerland has a long tradition of organising its core financial market infrastructure as a joint enterprise, according to the ‘ user - owned, user - governed ’ principle. in the case of the repo market, the current solution has proven its worth. nonetheless, due to changes in the stock market and regulatory environment, the snb has undertaken a reassessment of the situation. in the light of this, the snb has decided to conduct its monetary policy operations via a new trading platform, provided by six group ltd, as of may 2014. in this way, the repo market will be based on an integrated solution, in which the trading platform, securities settlement system and payment system are covered by a single source. moreover, further developments will also be possible, for example the expansion of trading to incorporate further products. since the new trading platform will resemble the existing swiss franc repo system ( eurex repo ), access for market participants will entail only minimal adjustments. we are confident that an integrated solution is the best means of ensuring a robust repo market infrastructure. bis central bankers ’ speeches charts bis central bankers ’ speeches