tries to picture a shock, eg a massive rise in oil prices. the immediate consequence will be an increase in the price level and a fall in production. this constellation confronts the central bank with a trade - off between price stability and growth. if the bank ’ s sole concern is a quick restoration of price stability, it will raise interest rates and consequently exacerbate the loss of output. if, on the contrary, it reacts solely to the production effect, it will strengthen the shock - induced deviation from the goal of price stability by lowering interest rates. reacting to shocks may lead to a trade - off between the variability of output and the variability of the price level ( king 1999, p 12 ). this trade - off in itself is an extremely complex phenomenon. it is determined by the structure of the economic process and the dynamics of expectations. there is, realistically speaking, no chance to deduce a general policy rule and to formally embody such a rule in the central bank mandate. any decision to correct slowly and gradually or in a single bold effort any deviation from price stability, whatever its origin, can only be taken individually. monetary history has successful examples to show for both patterns of reaction, but also unfortunate episodes in which central banks actually increased the variability of the price level and of output through activist manoeuvres. it would thus appear reasonable that an addendum, unspecified as to substance, should be made to the mandate of ensuring price stability. for example, to the effect that in fulfilling the mandate due attention should be paid to the development of economic activity. art. 99 of the swiss federal constitution obliges the snb to conduct a monetary policy which serves the general interests of the country. endeavours are under way to spell out this vague formulation in more detail in the forthcoming comprehensive revision of the national bank law. when revising our monetary policy concept, we took a step in this direction by quantifying the stability target ( cpi inflation below 2 % ) and undertaking to adhere to the target in the medium term. transparency a further aim was to continue to improve transparency. it is a fact that the call for more transparency has sounded far and wide. this call is more than merely a short - lived fashion. there are two especially valid reasons for the formerly rather reserved central banks to communicate openly and in good time. for one thing, transparency - in particular, ex post transparency - is an indispensable precondition for accountability and thus

niklaus blattner : financial market infrastructures facing technological, economic and regulatory challenges summary of a speech by mr niklaus blattner, deputy chairman of the governing board of the swiss national bank, at the xi awk group financial services lunch, zurich, 20 september 2006. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * smoothly and efficiently functioning financial market infrastructures form the backbone of the international financial centre of switzerland. the future of these infrastructures will largely hinge on trends in europe, which point to stronger consolidation. however, healthy competition is the prerequisite for investment and innovation incentives in a consolidated stock market and settlement environment. this would also contribute to reducing the existing inefficiencies, in particular with regard to the processing of cross - border transactions. yet a competitive environment will develop only if market participants can choose freely among the different providers and if the infrastructures are interoperable, i. e. if the providers grant each other and their participants mutual non - discriminatory access. at present, competitive obstacles exist at the technological, economic and regulatory levels. for instance, costs for changing providers are high. moreover, financial market infrastructures are often operated in “ silo ” mode – either explicitly or implicitly – with clearing and settlement being handled by only one provider. but silos impede competition. a suitable regulatory framework must therefore be created to strengthen competition. the eu ’ s new markets in financial instruments directive ( mifid ), for example, is expected to bring about important changes and intensify competition in the european financial market. this development will also influence the future of financial market infrastructures in switzerland. against this background, it is certainly crucial for the swiss financial market infrastructures to persistently foster their competitiveness. they have pursued this strategy so far, and will need to continue doing so in the future.