which the government can borrow, however, is the path for the bis central bankers ’ speeches amount of government debt held by the private sector, rather than the total amount of gilts in issue. that is true when the bank purchases gilts and will be true later when the bank comes to sell the gilts. not only is combining monetary and fiscal policies unnecessary, it is also dangerous. either the government controls the process – which is “ bad ” money creation – or the bank controls it and enters the forbidden territory of fiscal policy. it is peculiar, to say the least, that some of the same people who believe that the governor of the bank is too powerful also believe that he should stand on the steps of threadneedle street distributing £50 notes – a policy which you will appreciate is rather hard to reverse. for the same reason, the bank could not countenance any suggestion that we cancel our holdings of gilts. the bank must have the ability to reverse its policy – to sell gilts and withdraw money from the economy – when that becomes necessary. otherwise, we run the risk of losing control over monetary conditions. giving money either to the government or to households directly, or indeed cancelling our holding of gilts, means that the bank of england has no assets to sell when the time comes to tighten monetary policy. and when bank rate eventually starts to return to a more normal level, as one day it will, the bank would then have no income, in the form of coupon payments on gilts, to cover the payments of interest on reserves at the bank of england that we had created. the bank would become insolvent unless it created even more money to finance those interest payments, and that would lead ultimately to uncontrolled inflation. that is a road down which the bank will not go, and does not need to go. i suspect that the advocates of “ helicopter money ” and related ideas are really talking about a relaxation of fiscal policy. it would be better to be open about that. enough of what the bank of england should not be doing. so what should we be doing? since the monetary policy committee last published an assessment of the economic outlook, other central banks have been active. the european central bank announced its plans for outright monetary transactions, the bank of japan expanded the scale of its asset purchases, and the federal reserve committed to continue with its asset purchases until the outlook for the labour market improves substantially. our current programme of asset purchases will

philipp hildebrand : switzerland and global competition - an all - purpose strategy summary of a speech by mr philipp hildebrand, member of the governing board of the swiss national bank, at the university of st gallen, st gallen, 29 august 2005. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ) * * * openness was one of the major factors that made switzerland one of the richest countries in the world. a significant portion of our industry, and one upon which our current prosperity is based, is the direct or indirect outcome of foreign expertise and the efforts of foreign entrepreneurs. these people were attracted to switzerland – particularly in the 19th century – by its openness and its stable, liberal environment. openness promotes competition, innovation and progress, thereby securing sustained prosperity. but switzerland strayed from the straight and narrow when it began erecting barriers to competition – barriers that provided ever greater protection to its domestic market. the ensuing insulation of the domestic market is probably one of the main reasons for switzerland's growth slump today. external trade policies are always domestic market policies as well. consequently, external trade policies have instruments that can be effective in opening up the domestic market from outside. this openness to external trade is of utmost importance, therefore, not only for exporters, but also for the domestic market. being open towards europe and towards other trading blocks is not mutually exclusive. ultimately, being open means pitting oneself against the very best, irrespective of the region they belong to, since only if we compete against the best, will we be one of the best in the future. consequently, it would be wrong for switzerland to limit its openness to a given geographic region. openness must be the fundamental principle governing all of its economic policies. even in the changing global environment of intensive competition, switzerland can increase its prosperity if it rethinks its economic policy direction and embraces former tried and tested virtues such as openness, freedom and personal responsibility.