we needed was for the franc to become the first currency in the line of fire, or something like the lightening rod of the international monetary system. a second apprehension that we had was that it might become very difficult in the future to conduct an autonomous monetary policy. switzerland, together with liechtenstein, would now be totally surrounded by a single monetary zone. as you know, switzerland, like israel, is a small open economy, and i emphasize both the words small and open. indeed, we are widely open. nearly half of our national income is generated abroad, and the european union is by far our largest foreign partner. about two thirds of our exports head in that direction, and we are one of the best customers of the eu. we are also very small, meaning that although we have no significant impact on the rest of europe, we are very exposed to foreign shocks, whether they are real or monetary in nature. our activity is highly correlated with that of the eurozone. under these conditions, would the snb still be in a position to conduct an independent monetary policy? would it be realistic to expect the snb to follow a course that deviated from the one set by the european central bank, or would the snb be forced to shadow the actions of the ecb? the question of an independent monetary policy is not just a matter of safeguarding the appeal and the prestige of our jobs as swiss central bankers. the stakes are much higher. for one thing, even if swiss activity and economic conditions more generally are highly correlated with events in europe, the correlation is less than perfect. our economy, although offering many similarities with those of germany, france, and italy, also has its specific features. thus, switzerland is very well endowed with physical and human capital. as a consequence, the return on capital is relatively low and wages are comparatively high, particularly so for unskilled labour. we thus tend to specialize in capital intensive and high - value added activities. external shocks tend to impact on us in a way that is not quite the same as on the rest of europe. moreover, we also have to cope with home - brewed shocks. it is for these reasons that we are eager to keep an autonomous monetary policy. furthermore, if markets became convinced that in the future the snb ’ s actions would simply mimic those of the ecb, they would rapidly force a convergence between swiss nominal interest rates and those of the eurozone. our real interest rates might remain

now present our assessment of the global economy. global economic growth was weaker than expected in the first quarter of 2015, and this development had a detrimental impact on world trade. in the us, gdp declined slightly, partly due to special factors. moreover, the strong us dollar weighed on exports. in the euro area, however, the economy continued to pick up, supported by persistent euro weakness and improved lending conditions. in contrast to the previous quarter, all of the large member states contributed to growth. italy reported gdp growth for the first time since entering a multi - year recession. in japan, too, the economy gained momentum. in the emerging economies, performance remained uneven, while growth continued to cool in china. the global economy is expected to gather pace again, reinforced by expansionary monetary policy around the world and ongoing low oil prices. for instance, after a disappointing first bis central bankers ’ speeches quarter, the two large economies, the us and china, are starting to show signs of improvement. nonetheless, uncertainty about the future development of the global economy remains high. various risks – first and foremost the difficult financial situation in greece and geopolitical tensions – could jeopardise the recovery. swiss economic outlook according to initial estimates, switzerland ’ s real gdp declined slightly in the first quarter. as expected, goods exports suffered from the strong swiss franc appreciation, but also from a downturn in global trade. domestic demand, by contrast, developed robustly. having said this, the situation varies considerably from one industry to another. profit margins are under significant pressure in several sectors, and this is forcing companies to take steps to reduce production costs and raise efficiency. against this backdrop, unemployment has increased slightly on a seasonally adjusted basis. over the coming months, the global economic recovery is likely to lead to a gradual upturn in demand for swiss products ; this will cushion the impact of the exchange rate shock somewhat. as the global economy gathers momentum, we expect switzerland to return to positive growth in the second half of the year. the snb continues to anticipate growth of just under 1 % for 2015 as a whole. monetary and financial conditions allow me to move on now to monetary and financial conditions. since the discontinuation of the minimum exchange rate, inflation has moved well into negative territory. this is chiefly attributable to imported goods prices, which in may were down roughly 5 % year - on - year, mainly due to the fall in oil prices. domestic inflation