euro in march 2003 to chf 1. 55 today, thus depreciating by about 6 %. the franc ’ s fall is even greater in real terms owing to the higher inflation rate which prevailed - and still prevails - in the euro zone. also in real terms, the swiss franc is worth less in euros than when the single currency was launched five years ago. this development shows that, as the new european currency has gained in stature, the markets have taken a different view of the safe - haven role traditionally played by the franc. it is probably also to the euro ’ s existence that we owe the swiss franc ’ s reduced volatility and its rather controlled weakening, whereas the dollar experienced difficulties. this is a reaction to which we were not accustomed ; moreover, it is good news for our economy. while it may be justified by the united states ’ huge external deficit, the slide of the greenback has nevertheless exerted an asymmetrical impact : it has hit european exporters hard, but has not affected asian currencies that have been kept artificially low by massive intervention. the swiss franc's fall against the single currency has sheltered us somewhat from these upheavals. guarded optimism for 2004 our economic forecasts for the current year are marked by cautious optimism. the recovery that began in the third quarter of 2003 is set to continue. the production gap, which measures the difference between actual production and its potential level, is expected first to stabilise and then to gradually narrow. however, this will take time. as usual, the first signs of an economic recovery appeared in the industries geared to exports. next, capital goods investment began to pick up, driven by the high rate of depreciation in new technologies ; there is therefore significant pent - up demand. to a large extent, these investments feed on imports, so that the immediate impact on our economy is limited. moreover, as investment is also gaining steam among our neighbours, our own capital goods industry, with its strong export bias, has improved. while consumer spending has held up well in the past two years, it is expected to gain momentum as the economic environment brightens. consumption will thus continue to support growth, though it will probably cede pride of place to more cyclical components such as capital expenditure and exports. it will benefit, in particular, from the gradual improvement that will be seen on the labour market. at this stage of the economic

to justify our actions. lastly, the new act grants us greater freedom in the choice of instruments to manage our monetary reserves. as you know, the national bank has considerable monetary reserves. these reserves, which are a national asset, are essential for pursuing an independent monetary policy by reinforcing confidence in our currency. they are thus instrumental in ensuring its stability. it is crucial, however, that these reserves be managed effectively and with due regard to liquidity and security requirements. over the next few weeks, we will define to what extent we wish to take advantage of the investment possibilities offered by the new act. we will present our plans on this matter at our press conference on june 17. conclusion the swiss economy has enjoyed a high degree of monetary stability for some years now, and this advantageous situation should last for a number of years to come. while the international environment in which we operate has improved, it remains unstable. we cannot rule out fresh setbacks. however, we can count on the significant adaptability of our companies and look to the future with confidence. nevertheless, our high standard of living in international terms should not lull us into complacency. in recent decades, we have seen our position among the leaders of the most highly developed countries eroded. corrective measures are necessary. let ’ s be clear : the main threat to our prosperity does not come from abroad, where the “ made in switzerland ” label is still a success when it is associated with quality. the threat comes from within switzerland. take, for instance, our excessive predilection for regulations - often an invisible barrier to the free play of competitive forces - and our hesitation to fully accept an international environment that is more competitive and innovative than it was 20 years ago. the guiding principle for our structural reforms should be : more competition and fewer regulations. we have to have the courage to take this path in order to durably enhance our economic growth. this is essential to the balanced development of our economy and to the confidence that each of us feels in the future. it is with this wish that i conclude my remarks. thank you for your attention and for the interest you show in the national bank and its activities.