countries. with an increasing international integration of individual economies, the awareness of mutual dependence has also grown. accordingly, efforts to coordinate the behaviour of individual countries in the field of economic policy have been reinforced. in this context, it is important to realise that the stability of international economic and monetary relations is not primarily a matter of institutional regulations. what is of the essence is the conduct of individual countries. these considerations are also relevant for an assessment of the european monetary union. creating the union at the beginning of this year meant a big step forward for the process of european integration. with the european monetary union, the participating western european countries are trying to put their currency relations on a new footing in line with the changed environment. if the european monetary union can be implemented according to plan, this will vastly improve the preconditions for a balanced economic development in europe. freedom of movement for persons will be facilitated along with the free flow of goods, services and capital. after what has been said, all will depend on whether the participating countries can muster the discipline indispensable for sustained and convergent stability - oriented policies. in the context of the run - up to monetary union, significant progress has been made in individual countries. inflation has been brought under control. budgets have been brought in line with lasting effect. both achievements did not fail to have a positive impact on the development of interest rates. in view of the challenges that lie ahead, one must bear in mind that with the fixing of exchange rates, individual countries have forfeited an element of flexibility. in the past, imbalances in economic development were compensated with flexible exchange rates. losing this possibility is significant, because many countries already lack the capacity to adjust. we note with satisfaction that the monetary concepts of the european central bank are largely in conformity with our own. the chances are thus good that this will result in a sustained convergence of stability - oriented policies and, as a consequence, basically stable exchange relations between switzerland and the new european currency area. should, however, difficulties arise when the present goals are implemented, we would have to expect some turbulence. this would be likely to result in an upward pressure on the swiss franc. the national bank would, of course, have the possibility of relaxing monetary policy to counteract such a trend. this might, however, conflict with our policy ’ s orientation towards stability. the basic considerations on monetary policy outlined here also apply if we look beyond the european environment. the crisis - like

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. to this must be added the changing financing requirements and practices of enterprises. such changes depend on economic developments, but also on trends of which it is difficult to say if they will prove to be of lasting influence. in the technological field, the primary concern is continued development in data processing and communications. these have implications for the design of products, the conduct of business, international integration and the development of costs and prices. the resulting consequences, for example for the ideal size of an enterprise, are a matter of controversy. as has already been pointed out, the dividing lines between individual suppliers are becoming increasingly blurred. moreover, new suppliers, notably among wholesale distributors and in the consumer goods industry, are pressing into the financial area. as regards retail banking, it may be assumed that the population of a highly developed industrial country will still require financial services in the future. straightforward transactions tied to a particular location will be of primary importance. these should be carried out rapidly, reliably and cost - effectively. for economic and technological reasons, there will be an increase in providers, and this, in turn, will strengthen competition. trading and advisory services with their strong international orientation have shown an impressive development in recent years. experience has been that this is a line of business which not only offers opportunities, but also involves considerable risks and is very much centred on people. it seems quite remarkable that all major banks in industrial countries are currently concerned with their strategy in this field. the future development in portfolio management is of particular significance to us.