franc is still high. in view of the elevated deflation risks, the minimum exchange rate remains the key instrument for ensuring appropriate monetary conditions. a further appreciation of the swiss franc would have a major impact on wages and prices, and would push inflation well into negative territory. companies in switzerland would once again be forced into drastic price cuts, in order to remain competitive. in such a scenario, price stability would be seriously compromised. the minimum exchange rate helps to reduce such deflation risks. snb monetary policy let me close with a few additional explanations of snb monetary policy. on 30 november, the swiss voters rejected the gold initiative. the initiative demanded that the snb hold at least 20 % of its assets in gold, that it sell no more gold and that it store all its gold in switzerland. we are relieved that the gold initiative has been rejected. as we have pointed out on several occasions, had the initiative been accepted this would have seriously impaired the implementation of a stability - oriented monetary policy. let me just take this opportunity to reiterate that, in an international comparison, the snb ’ s gold holdings are high. gold has always been, and will remain, an important component of our currency reserves and we have no intention of selling gold. in the prevailing international environment, the monetary policy challenges facing the snb remain considerable. the situation is still particularly difficult in the euro area. in order that the snb is able to fulfil its mandate – of ensuring price stability while taking due account of economic developments – in the best possible way, it must make full use of its room for manoeuvre in monetary policy. for this reason, the snb will not hesitate to take further measures to fulfil its mandate, should they prove necessary. ladies and gentlemen, thank you for your attention. bis central bankers ’ speeches

thomas jordan : prospects for the swiss economy in 2009 summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at the erfa - gruppe, weinfelden, 15 january 2009. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * following a long, strong and broad - based growth phase, the world economy moved into a major recession in mid - 2008. about a year after the beginning of the unprecedented financial market crisis, there was a radical turnaround in the global economic outlook. the european and asian economies were not disconnected from the us, as had been hoped. the swiss economy leans heavily on its export and financial sectors and faces a difficult year. a recession appears unavoidable in 2009. consequently, the skilful deployment of monetary and fiscal policies as well as optimal conduct on the part of business practitioners in switzerland are particularly important. monetary policy can be changed quickly and its impact is relatively rapid through its influence on interest rates and the exchange rate. the snb has reacted resolutely to the deterioration in the economic situation and has reduced interest rates to almost zero. if necessary, monetary policy can be rendered even more expansionary through a series of alternative instruments. in the case of fiscal policy, the focus is on effective automatic stabilisers – first and foremost, allowing the occurrence of temporary budget deficits, together with unemployment benefits and compensation for short - time working. in view of the extent and risks of the current crisis, fiscal policy will need to consider and prepare the deployment of additional stabilisation measures alongside the automatic stabilisers. in addition to the increased focus on economic policy, business practitioners within the swiss economy are also challenged. in the case of banks, it is essential that credit shortages for companies and private households be avoided. moreover, interbank business needs to be strengthened in order to smooth out liquidity imbalances. companies must enhance their innovativeness and use opportunities for opening up new markets. the swiss economy has many structural strengths and this prompts confidence that switzerland will overcome the crisis.