rate affect both the levels of domestic interest rates and swiss franc exchange rates ( cf. chart 4 ). 4 if the snb expects inflation to rise persistently above desirable levels, it can raise the policy rate and strengthen the swiss franc, thereby cooling the economy and inflation. conversely, if the snb anticipates that inflation might fall below the range that is consistent with price stability, it can lower the policy rate to stimulate economic activity and help prevent deflation. changes in the level of interest rates have a broad impact on the economy, albeit with some time lag. the effects filter through to the economy via various channels. for example, changes in interest rates affect the cost of capital, which over time leads to adjustments in both consumption and investment decisions. the level of interest rates also affects asset prices, which in turn affect household wealth and the value of collateral. in addition, any change in interest rates can affect the swiss franc exchange rate. for example, a rise in swiss interest rates relative to foreign interest rates may strengthen the swiss franc and thus dampen demand for swiss exports. the snb complements its interest rate policy with additional monetary policy measures, particularly fx intervention, as necessary. 5 given the importance of the swiss franc exchange rate for economic activity and inflation in switzerland, as well as the low level of swiss interest rates, fx intervention is at times an important policy instrument for the snb. in order to ensure price stability, the snb can buy or sell foreign exchange against the swiss indirectly, the exchange rate affects inflation through the demand for domestic goods and services, with a swiss franc depreciation increasing demand and an appreciation reducing it. switzerland is special to the extent that the swiss franc can behave independently of domestic factors due to its international role as a ‘ safe haven ’ currency – that is to say, a currency that is attractive to investors in times of heightened global uncertainty and market turbulence. this can lead to sharp and rapid appreciation of the franc, making swiss exports more expensive and imports cheaper, which can undermine price stability by creating a deflationary environment. in recent years, a number of crises have led to a surge in the value of the swiss franc, in particular the global financial crisis and the european sovereign debt crisis. cf. fink, frei, maag, and zehnder ( 2024 ). following a comprehensive review in 2022, the snb ’ s monetary policy concept now

toshihiko fukui : the centenary of the bank of japan ’ s london office speech by mr toshihiko fukui, governor of the bank of japan, at the reception for the centenary of the bank of japan representative office in london, 29 june 2004. * * * welcoming guests to the party and expressing appreciation for the 100 - year - long friendship distinguished guests, governor king, ladies and gentlemen, on behalf of the entire institution of the bank of japan, let me extend our gratitude to all of you and your predecessors for our long - standing friendship and your cooperation with our london office. we have been extremely happy to work with every one of you, regardless of nationality, domicile or profession. some guests have worked with us in the financial, academic and public sectors, and some other guests have worked for the uk - japan relationship. we also owe very much to the guests from the active and hard - working japanese community here. the year of 2004 marks the centenary of the bank of japan ’ s london office. i will take this opportunity to share with you some reflections over the past century by highlighting major events that have involved our london office. looking back on the 100 - year history and thinking about the central bank what prompted the bank of japan to open an office in london 100 years ago? the imminent objective then was to supervise the issuance and repayment operations of japanese government bonds in london. in 1904, japan, despite being a small emerging country, was forced into the so - called russo - japanese war. in order to engage in the warfare, the japanese government issued sterling - pound bonds four times in the london market. funds raised through the four issues altogether amounted to double the size of the japanese government budget in an ordinary year. under the circumstances, the bank of japan decided to open its london office to superintend the operations of the national debt. some of you may recall how such large issuance was arranged. it was baron korekiyo takahashi, then deputy governor of the bank of japan, who stayed in london to negotiate for the issuance. his efforts were supported by baring brothers, hongkong shanghai bank, and mr. alexander shand of the then parr ’ s bank amongst others. it is well known that baron takahashi later became governor of the bank of japan, and subsequently minister of finance and prime minister. you can find a hard copy of the bond in the showcase at the back of this room. it is interesting