there are no theoretical or empirical grounds to indicate that the swiss economy will be adversely affected by the proposed regulation. even though, in the short term, the transitional phase would generate some costs for those regulated, this is clearly outweighed by the long - term advantages. is international competitiveness being weakened? the second concern expressed is that tougher banking regulation would have negative repercussions for the swiss financial centre if it is stricter or too strict compared with other countries in relative terms. critics say that this would be a disadvantage in international competition, with far - reaching consequences such as a weakening – or even redimensioning – of the swiss financial centre. they claim that customer assets and international companies would move abroad, since the swiss financial centre would no longer offer a comprehensive range of banking services. switzerland would therefore lose jobs and create less added value, they believe. key factors for international competitiveness one significant aspect of the discussion about the repercussions of regulatory differences is that other factors are at least as decisive for the international competitiveness of the swiss banks. these include favourable tax conditions, political and economic stability, a high degree of legal certainty, excellent asset management expertise and high standards in the banking business generally. overall, this “ swissness ” represents a crucial success factor for the banks when it comes to competing internationally with other financial centres. nor is there a connection, empirically speaking, with passing on the banks ’ financing costs to customers : during the phase when the banks were constantly reducing their capital ratios, the spread between the borrowing rate and the lending rate did not narrow ( cf. kugler, 2011. presentation in vienna ). bis central bankers ’ speeches secondly, we should bear in mind that a country - specific difference in banking regulation is nothing new. even before the financial crisis began in 2007, both the swiss big banks were subject to stricter regulations in terms of capital requirements than their competitors in many other countries. as already mentioned, finma ruled, in autumn 2008, that as of 2013, both big banks will have to hold double the amount of capital specified in international minimum standards. the current “ swiss finish ” therefore calls for an extra 100 %! however, these regulatory differences do not seem to have harmed the swiss financial centre in the past. on the contrary, switzerland ’ s banks have always had a tradition of a “ swiss finish ”. stability is one of the swiss financial centre ’ s clear competitive advantages and has made a significant contribution

pace instead of a quarterly one, and app purchases could therefore end in q3, at some point to be discussed. in parallel, another way to enhance optionality could be to remove the word “ shortly ” from the forward guidance on asset purchases. this would be a possibility to break the quasi automatic temporal link between the two instruments whilst retaining the sequencing. optionality would mean that the lift - off could possibly take more time, if warranted. this temporal decoupling could give more scope for fine - tuning, which is an advantage in uncertain times. rather than forcing ourselves to act on both instruments almost simultaneously ( which could fuel fears of an excessively brutal effect ), we could give ourselves more time and consider the latest inflation outlook before deciding about the calendar of rate hikes : a decision that anyway we don ’ t need to make before our june meeting. any speculation about this calendar of future lift - off is at this stage premature. the forward guidance on interest rates let me stress here an important semantic point about our monetary stance : the steps i am discussing here are about the normalization of our monetary policy, not about tightening. it ’ s still the exit from exceptional instruments and an extremely accommodative monetary policy ( increase of the already large assets stock, negative interest rates ). it ’ s the first phase of a gradual return towards a more neutral stance, which we are still far from. tightening would be another story, going beyond a neutral stance, which is not within our present policy horizon. let me then remind you of the three state - dependent criteria on our forward guidance : “ the governing council sees ( i ) inflation reaching 2 per cent well ahead of the end of its projection horizon ; ( ii ) and durably for the rest of the projection horizon ; and ( iii ) it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term ”. today, in my personal judgement, it might be considered that the first criteria ( with a headline inflation significantly above 2 % since summer last year and expected to remain there for months ahead ), and the third one ( with underlying inflation around or above 2 % by most definitions ) are fulfilled. at this stage, according to our december forecasts, the remaining one ( about inflation remaining at or above 2 % for the rest of the projection horizon ) is not met. this could possibly change in the next quarters. however, we should