affairs are often the focus of animated political debate. paradoxically, these debates do not relate to monetary policy in the narrow sense of the word, but rather to other aspects of a more operational nature – such as the level of the monetary reserves or the distribution of the profits. allow me to give you an example. following recent deliberations by the national council's control committee, information was published to the effect that an additional part of the snb's gold stocks might be liquidated to fund another extraordinary distribution of profits amounting to some chf 10 billion. this created the totally mistaken impression that the national bank was oversupplied with monetary reserves. now that half our gold stocks have been sold and the proceeds distributed to the confederation and the cantons, the snb holds an appropriate level of monetary reserves in the form of gold and foreign exchange for the conduct of monetary policy. bearing in mind the economic importance of our country, however, our level of currency reserves does not place us in a leading position amongst the group of the best endowed countries. far from it, in fact. in 1950, our reserves amounted to 30 % of gdp. this percentage has now fallen to 12. 5 %, situating us in a respectable middle position on the international scale – along with the scandinavian countries. if we bear in mind that, unlike these nations, switzerland is also an important international banking centre, we cannot reasonably conclude that our current monetary reserves are excessive. what is more, the law is perfectly clear on who has the final word in this matter. it is the bank council – not parliamentary committees – that is authorised to assess the snb's reserves policy, including any augmentation or depletion of the bank's monetary reserves. the reserves policy adopted by the bank council bears the hallmark of common sense, aiming for a gradual rise in the level of monetary reserves so that the relationship of reserves to gdp does not deteriorate over time. this approach is consistent with the fact that, at present, we only have a moderate level of reserves. those who believe that the snb has surplus monetary reserves overlook the fact that switzerland's central bank constitutes a form of insurance with respect to the monetary stability of the country. like all kinds of insurance, the national bank – faced as it is with expanding markets and increasing risks – must be able to rely on its reserves growing in tandem with the economy. if they did not do so, its ability to operate on

philipp hildebrand : swiss monetary policy and financial markets summary of a speech by mr philipp hildebrand, member of the governing board of the swiss national bank, at the autumn forecast of the swiss institute for business cycle research, zurich, 5 october 2006. the complete speech can be found in german on the swiss national banka€™s website ( www. snb. ch ) * * * transparency and communication enhance the impact and the precision of monetary policy. monetary policy functions through expectations. this means that it is first and foremost expectation management. central banks strive for transparency regarding their methods and approaches. all in all, the current economic and, in particular, the structural uncertainties are resulting in a greater range of possible economic scenarios and thus also in an increase in the range of expectations regarding our future monetary policy. in other words, being transparent does not automatically mean being predictable. therefore, the swiss national bank ( snb ) considers it particularly important to communicate its monetary policy concept to the markets and the public. this allows them to arrive at similar conclusions to those reached by the snb.