to oil prices. however, core inflation – which excludes oil and food prices – has not increased across the board. while it has stabilised in the us, it remains low in other regions, particularly in japan and the euro area. the ongoing recovery of the real economy, however, is likely to produce higher core inflation in these economies, too, in the near future. against the backdrop of an expanding economy and higher inflation, the us federal reserve raised its key interest rate in march – the third interest rate hike since the end of 2015. the page 2 / 10 normalisation of us monetary policy is therefore continuing. by contrast, the european central bank and the bank of japan are maintaining their expansionary monetary policy. does this mean there is cause for optimism for the period ahead? global economic sentiment is really quite positive. nonetheless, significant political uncertainties remain. within the euro area, the french elections are currently dominating the headlines. uncertainty persists about how brexit will unfold. looking across the atlantic, there are still a number of questions concerning the new us administration ’ s future economic and trading policy. new political directions which influence the growth of our trading partners are of course highly relevant for a small open economy like switzerland. and what about the economic situation here at home? the swiss economy is still recording moderate growth ( cf. chart 3 ). following the discontinuation of the minimum exchange rate, gdp contracted as a result of swiss franc appreciation in the first quarter of 2015. however, since then, the economy has grown, and current economic data indicate that this growth will sustain. for 2017, we are forecasting an increase in gdp of some 1. 5 %. nevertheless, production capacity is still not fully utilised. furthermore, recovery varies from one industry to another. overall, the situation today is much better than many observers had expected at the beginning of 2015. the swiss economy has once again demonstrated its flexibility by, for example, making swift adjustments to working hours and taking measures to improve production processes. in view of the structural changes taking place, this adaptability will remain key, regardless of developments in the international economy and exchange rates. i ’ m thinking here of traditional retailing, which increasingly has to compete with internet trading. digitalisation, too, presents new challenges for manufacturing and finance that will continue to call for major efforts on the part of companies and staff in all the industries concerned. current monetary policy what challenges does this situation pose for our

jean - pierre roth : the creation of the euro and the new international monetary order - a view from switzerland speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the 2nd conference of the “ geld und wahrung ” foundation on financial stability and globalisation, frankfurt, 3 - 4 june, 2004. * 1. * * introduction it is widely acknowledged that the birth of the euro on january 1, 1999 was a milestone in the process of european integration. giving up national sovereignty in monetary matters was a very bold move of truly historical proportions. it will have long - lasting economic and political consequences. it should promote efficiency, transparency, and growth. the creation of a single currency should also act as catalyst towards further european integration. moreover, and this is really what i would like to focus on today, the creation of the euro has changed the world ’ s monetary landscape. i believe that one can say without fear of exaggeration that it has led to a new international monetary order. and for most of it, this is very good news indeed. 2. our pre - euro fears to be honest, i must admit that prior to the introduction of the euro we were somewhat worried at the swiss national bank. although we fully appreciated the benefits that switzerland would draw from the creation of the euro in terms of increased transparency and lower transaction costs, we were also quite concerned about possible risks. we had three main fears. first, we were concerned that the swiss franc might be in for a roller - coaster ride. in the past, whenever the dollar was under attack, international investors turned their attention to the german mark and the swiss franc. their status as safe - haven currencies meant that at times of turbulences on foreign exchange markets they would move well beyond what economic fundamentals could justify. in fact, the swiss franc often exhibited a tendency to appreciate even more than the german mark, a phenomenon that was often attributed to the relative narrowness of the swiss financial markets. now with the german mark gone, wouldn ’ t all attention focus on the swiss franc? would it not mean that in any dollar crisis the franc would have to bear even more of the adjustment than in the past? even worse, what would happen if the euro itself were under attack? the last thing we needed was for the franc to become the first currency in the line of fire, or something like the lightening rod of the international monetary