two more important variables in this new phase : the level of interest rates that we reach, and the duration for which we stay there. the level of the “ terminal rate ” regarding the level, the markets ’ estimate of the “ terminal rate ” was, until the last few days, around 3. 5 % in the euro area. the fluctuations since yesterday may be excessively volatile, but i shall just make one comment here on the calendar and another on the substance. regarding the calendar, without setting ourselves any strict time limit, i think it is possible that we will have reached this peak by summer... which officially ends in page 13 of 19 september. that would leave us four governing council meetings, after the one in march where we will have reached 3 %. we shall probably go beyond this 3 %, but there will be no obligation to act automatically at each council meeting, and we are not ruling out acting subsequently if new elements justify it. this gives a sufficiently broad scope of action to be serene, open : after march there will be less monetary urgency as we will need to analyse the economic evidence more closely. regarding the substance and method, i do not believe it is possible to model “ a targetcompatible rate ”. it is appealing from an academic point of view, and such a model was notably developed by the economist lars svensson who went on to become deputy governor of the swedish riksbank from 2007 to 2013. 11 but in practice this method is ineffective. it relies heavily on having a very accurate model and clear identification of the shocks hitting the economy. the substantial forecast revisions over recent quarters underline just how difficult it is to calibrate policy based on forecast targeting. as a consequence, this method gives highly volatile estimates of the terminal rate, which can double depending on the assumptions and forecasts. however, i do think we need some pointers, which brings me, regarding our channels of transmission, to the first essential “ navigation lock ” : that of the future stabilisation of the level of rates. what economic data should guide us in deciding whether or not to stop the rate hikes? in my view, the central criterion is a turnaround in the trajectory of inflation, not just headline inflation – we are very probably close to that point – but above all underlying inflation, notably excluding energy prices – which may lag the headline measure by several months. it is this underlying inflation that monetary policy can best treat, and which provides the

out by the swiss national bank ( snb ) should be seen as part of these measures.... but the resilience of the big banks has been increased given this situation, the fact that it has been possible to increase the resilience of the swiss big banks is crucial. credit suisse boosted its capital through private investors by a total of chf 10 billion. it thereby strengthened its equity position substantially and increased its capacity for absorbing additional shocks. the losses of chf 3 billion announced by the bank for the fourth quarter show how important it was to reinforce the capital base. at ubs, the government package provided significant relief to the balance sheet from the burden of illiquid positions particularly affected by the crisis. with this package, the snb made it possible for ubs to transfer illiquid positions to a special purpose vehicle. the ubs provided this special purpose vehicle with equity amounting to usd 6 billion. the confederation compensated ubs for the capital requirement arising for this purpose by subscribing to mandatory convertible notes ( mcn ). since the announcement of the package, the ubs liquidity situation has stabilised. the numerous international measures aimed at stabilising the financial system have also had a positive effect on the position of the swiss big banks. nevertheless, further losses cannot be ruled out in view of the difficult market conditions. the situation remains serious, and the snb will continue monitoring it closely together with the swiss federal banking commission ( sfbc ) and the federal department of finance. lessons from the crisis and reforms in switzerland i would now like to speak about the lessons learned from the crisis. the continuing financial crisis is almost unprecedented, in terms of both extent and duration. it is also unprecedented in terms of the measures taken by the authorities and the central banks with the aim of stabilising the situation and minimising the impact on the real economy. this also applies to switzerland. at the presentation of the last report on financial stability, we expressed our conviction that the financial system needs to be made more resilient to possible shocks. this is all the more valid if we consider the hundreds of billions of taxpayers ’ money that had to be spent worldwide on stabilising the financial system over the past few months. the focus is on the need for improvement in the “ shock absorbers ” : capital and liquidity. the crisis has shown that the current regulation in these areas is no longer sufficient in the case of the big banks.