. large conglomerate firms such as ltv, gulf and western, textron, and litton industries became conglomerates through numerous mergers, heralded with great fanfare from the business press. by the 1970s, such proclamations sounded hollow, as many conglomerate firms ’ equities were pummeled as their corporate structure proved unsuccessful. this period was followed by a decade of spin - offs as the conglomerates sought to streamline their operations and return to their original areas of expertise - and this reversal of strategy was greeted with considerable enthusiasm by the business press. much closer to home, we should also recall that the retail financial sector went through a phase of conglomeration about 15 years ago, in the movement toward the “ financial supermarket ”. the acquisitions of coldwell banker and dean witter by sears, shearson by american express, schwab by bank of america, and bache by prudential come to mind. despite the enthusiasm for the financial supermarket in the early 1980s, by the end of the decade the concept had stagnated, and the press instead reported the benefits of specialization and the provision of niche services. i believe this past experience with business conglomerates in the us should temper our views of the inevitability of today ’ s financial conglomerates. there are clearly challenges to managing much larger, more diversified firms, as well as benefits. this business strategy is surely not for all financial services firms. business conditions necessary for financial conglomerates to succeed the difficulties associated with operating a financial conglomerate are suggested by the business conditions that are necessary for such a conglomerate to succeed. we have heard, of course, of the potential economies of scale and scope in managing information that may allow large firms to reduce the unit costs of doing business. we are also aware of the potential for cross marketing, where economies of scope on the supply side allow firms to sell multiple products to their customers, and on the demand side allow consumers to conveniently purchase bundles of services. since a number of conglomerates of the past have been unable to improve upon separate delivery of services - including financial services - it is unclear whether technological or other changes have altered the nature of financial products or managerial capabilities sufficiently to result in significantly improved exploitation of scope economies. the potential benefits of reducing risk through sectoral and geographic diversification are another motivation for conglomeration. i have little doubt that in many cases the potential for diversification gains exists. however, we have heard very little about the expertise needed to merge

philipp hildebrand : reflections on the gold market speech by mr philipp hildebrand, member of the governing board of the swiss national bank, at the lbma conference, montreux, 26 june 2006. * * * introduction thank you for giving me the opportunity to speak to you this morning. the last time a member of the governing board of the swiss national bank ( snb ) had the opportunity to address this audience was in june 1999, when our present governor jean - pierre roth had the difficult task to explain why the snb intended to sell 1300 tonnes of its gold reserves. back then, the gold market environment was quite different : the price of gold had steadily declined to usd 250 / oz and there were widespread concerns in the market place that central banks were intending to liquidate a substantial part of their gold reserves. in seven years, the market has, in many ways, come full circle : the price of gold climbed to above usd 700 / oz before receding below usd 600 / oz, levels that were last seen in 1981. central bank activity in the gold market is not considered as a threat anymore. the agreements of 1999 and 2004 between 15 european central banks - the so - called washington agreements - have removed much of the uncertainty regarding central bank sales. indeed, market rumours today are arguably more concerned about central banks buying gold than they are about central banks selling gold. as many of you know, the snb completed its gold sales program fifteen months ago 1. in total, 1300 tons were sold. the decision to reduce our gold holdings by half was taken for two reasons that were highlighted by experts as early as 1997 : first the snb arguably had more gold than it needed. switzerland's official gold holdings per capita were five times higher than those of the next g10 country. second, the snb had - on a mark - to - market basis - excess capital reserves that were no longer required for monetary purposes. as a result, the decision was taken to sell 1300 tons of gold. in may 2000, as soon as the legal framework had been amended to allow market sales, the snb started it gold sales operations. we adopted a very transparent strategy and tried, within the constraints of the washington agreement, to maximize the proceeds of the gold sales in swiss francs. the average selling price of usd 350 / oz was 17 dollars higher than the average london fixing of the selling period. of course, with today's prices around 600 usd / oz, you