reduced again for the same reasons, we would not be able to resell our gold holdings. this would severely restrict our room for manoeuvre. furthermore, because gold pays no interest or dividends, the snb ’ s ability to generate profits and distribute them to the confederation and the cantons would be impaired. as a final point, note that currency reserves which cannot be sold are not truly reserves. it does not make sense to call for an increase in emergency reserves – gold holdings – and simultaneously prohibit the use of these reserves even in emergencies. the snb ’ s overriding objection to the gold initiative stems from the danger it poses to the conduct of a successful monetary policy. it would severely impair the snb ’ s ability to fulfil its constitutional and legal mandate to ensure price stability while taking due account of economic developments, in the interests of the country as a whole. drawing the lessons : reinterpreting the financial stability mandate let me close this digression and return to my main theme. once the initial shock of the crisis waned, policymakers began to address the root causes. the crisis has revealed two deficiencies of the existing regulatory framework. and because central banks are well placed to address these deficiencies, it has led to a reinterpretation of their financial stability mandate away from managing financial crises and towards preventing them. in this final section of my speech, i will explain in more detail what the deficiencies of the precrisis regulatory framework were, and why central banks are well placed to address them. the first deficiency of the framework was the focus on crisis management. before the crisis, it was thought best for central banks to act decisively once financial crises had occurred, rather than to try and prevent these crises from happening. the large cost of the recent crisis in terms of social welfare has made it clear that more effort needs to be invested in preventing such events altogether. the framework ’ s second deficiency was that it missed out an important dimension of risk. because it focused on preventing distress at individual financial institutions ( microprudential regulation ), the framework failed to capture the build - up of financial - system - wide risk. this “ systemic risk ” can arise from two sources. one is financial institutions that are either so large ( think ubs or aig ) or so interconnected ( think lehman brothers or bear stearns ) that their failure would threaten the stability of the entire financial system. in this regard, the

; since the start of the year alone it has increased by approximately 40 basis points. interest rates, which have reached a relatively lower level in this country, to some extent mitigate the economic burdens associated with the appreciation. they have probably also contributed to the slight recovery of the euro vis - a - vis the swiss franc in the past few days. in the first half of 2002, capital market rates were influenced by economic expectations in the united states. the positive economic data in march triggered a vigorous rise in long - term us interest rates by approximately 50 basis points within a very brief time. with economic indicators below expectations since april, long - term yields fell back to their mid - 2001 level. the expectations reflected in the futures markets concerning the development of money market rates – and therefore also monetary policy – have undergone a marked downward adjustment, notably for the us dollar, but also for the euro and the swiss franc. hopes of a vigorous and rapid economic recovery have given way to a more realistic assessment. the snb as asset manager in the context of its statutory mandate, the national bank manages sizeable assets ( table 1 ). in may 2002, their market value exceeded sfr 100 billion. the free assets ( sfr 21 billion ) are to be withdrawn from the national bank and allocated to other purposes. mr blattner will provide details on the management of the free assets. the monetary assets ( sfr 86 billion ) serve monetary purposes. claims from repo business ( sfr 16 billion ) reflect our money market activities on the assets side of the balance sheet, while swiss franc securities ( sfr 5 billion ) are available for absorption repos if necessary. foreign exchange reserves ( sfr 41 billion ) are at the centre of our activity as asset managers. at the end of 1997, the leeway previously granted solely for money market investments was legally extended. this provided a possibility to spread fixed - interest investments more evenly across various maturities and currencies and to widen the range of instruments. among the currencies ( graph 1 ), the us dollar and the euro predominate with shares of 42 % and 46 % respectively. the maturities of the investments extend over the entire interest rate curve, with the average maturity being around five years. in the debtor categories, government paper predominates, accounting for a share of more than 50 %. the rest comprises claims against international organisations and banks or bank - like borrowers with an above - average