by a fierce determination to start afresh, to avoid the reappearance of the misleading thinking that had led to pre - war protectionism, and to reconstruct the economies that lay in ruins. a phase of intensive work began, with the aim of reorganising the international monetary order. still isolated, both economically and politically, switzerland participated in the efforts without becoming a member of the bretton woods institutions. the gradual liberalisation of payments and trade rapidly led to a period of prosperity but also to a situation of disequilibrium in the operation of the international monetary system. inflation and speculative movements of funds became common features during the 1960s and the monetary arena was disturbed by multiple devaluations, particularly in europe. suspension of gold convertibility for the dollar, in 1971, hailed the collapse of the system of fixed exchange rates that had been put into place after the war. faced with a massive flow of speculative funds, the snb was forced to abandon stabilisation of the swiss franc in 1973. the transition to sustained floating for the swiss franc was definitely the most important change of direction in the monetary policy strategy pursued by our bank in its hundred years of existence. since then, the snb has had to learn to operate with floating, and to conduct an independent monetary policy. this has not always been easy, since the international environment has often been extremely instable with the result that the swiss franc has, at times, been heavily overvalued. during the 1980s, a greater degree of monetary discipline emerged and the fight against inflation became gradually more widespread. however, the world monetary order only achieved a certain level of calm towards the end of the 1990s, when the european monetary integration project took form and monetary policies were geared towards the defence of price stability. * * * * * in sketching this rapid portrait of the hundred years of our history, we see how much circumstances have differed from one period to another. it is therefore fitting that we pay tribute to all of our predecessors who – often in difficult circumstances – gave of their best in order that the swiss national bank might fulfil its mandate. it was their prudent management of the country's business that sheltered us from the numerous monetary crises that battered so many other european states. it was they, too, whose determination made it possible for the snb to conduct a monetary policy resolutely geared to stability. our generation is deriving immense benefit from this

of maintaining price stability in the euro area? obviously i think there are grounds for concern, for the reasons i just mentioned. but i also don ’ t want to exaggerate. we should not be alarmist. we should maintain a reasonable perspective. following the ecofin decision of last november, many observers promptly proclaimed the pact to be dead. i do not agree with this fatalistic view. the ecofin council did not kill the pact or even suspend its basic rules last november. what it did do was to give france and germany an extra year to adjust their fiscal policies in view of the commitments made by these countries. and in order to do so it decided to put one step of the excessive deficit procedures for these countries on hold pending the fulfilment of their commitments. if the pact is dead, then why have so many people been talking about it so much in recent weeks and months? to paraphrase one of ireland ’ s famous literary geniuses, oscar wilde, i would say that “ reports of the death of the pact are wildly exaggerated ”. the pact is not dead. it is growing up. it is making the transition from being a set of rules on paper to a set of rules applied in the real world. as is often the case when growing up, there are growing pains from time to time. moreover, while the pact may be experiencing a few growing pains, it still represents an improvement on the past. at present the euro area fiscal deficit stands at just under 3 % of gdp. ten years ago, at a similar point in the economic cycle, it was around 6 %. the pact may not be working as well as we would like, but this does not mean that it has been a failure. by being there, it has had some impact. we should give the rules and procedures of the maastricht treaty and the pact due credit for this. we should also be reassured by the fact that the euro area has a strong monetary constitution. it has an independent central bank with a clear objective to maintain price stability. monetary financing of budget deficits and the bailing - out of insolvent governments are prohibited. in short, monetary policy in the euro area is protected more than any other against the possible negative implications of unsound fiscal policies. i say this because i want to make one point clear. if the governing council of the ecb expresses its concern about fiscal developments and the implementation of the stability and growth pact, it