devaluation, and the snb ’ s activities during the second world war. peter bernholz of the university of basel is the author of the second chapter within this first part. he devoted himself to the period from 1945 to the early 1980s, including the return to convertibility, the bretton woods period, the transition to flexible exchange rates and initial experiences with an autonomous monetary policy. i am pleased to point out that the doors of the snb ’ s archives were opened unreservedly to these authors. the second part of the publication is more traditional. it is devoted to the last twenty - five years and deals with various aspects of the snb ’ s activities and its nature, ranging from monetary policy to the governance of the bank and including the new emphasis placed on financial stability, changing international relations, the renewed statutory framework in which we operate, and the adoption of a modern approach to managing our currency reserves. this second section, divided into eight chapters, was penned entirely by bank staff. we did not want a purely descriptive text. on the contrary, we asked the authors to adopt an analytical, critical approach, concentrating on key issues. in order to recognise the authors and their contribution to the book – and this is a departure from the previous commemorative works – they have been personally named at the beginning of each article. some forty in - house authors contributed to the work. for the third and last part of the book, which looks to the future, we took a step back. we called on the services of eight swiss and foreign economists, all specialists of global renown, asking them to discuss those issues of greatest concern to today ’ s central banks. we asked ernst baltensperger of the university of berne to provide a more academic assessment of the snb ’ s monetary policy over the last twenty - five years. we called upon marvin goodfriend of carnegie mellon university to give his views on the optimum inflation rate, frederic mishkin of columbia university to write about the policy of inflation targeting and to tell us to what extent it is truly a new phenomenon, and william white of the bank for international settlements in basel to address the difficult question of whether price stability is really enough. manfred neumann from the university of bonn was asked to provide an assessment of fixed and flexible exchange rate systems, peter kenen of princeton university to give us his opinion on the need for foreign exchange reserves in flexible exchange rate systems, martin hellwig from the max planck institute

the national central banks will be the shareholders in the ecb and the role of the governors of the national central banks, both in the system decisions and in monetary policymaking will be a central one. influence in decision - making will be based first on the one - person - one - vote principle but above all on the expertise, professional skills and activeness of each central bank committee representative and eventually of the governor. this means that the national central banks will need to be able to carry out all the analysis and operations that have been required so far but, in addition to that, to expand their expertise and analyses to the euro - area level. * * * [UNK] one of the most important matters that the ecb ’ s governing council will have to decide once it starts operating, is of course its monetary policy strategy. credibility in monetary policy requires clear targets, so that the aims and objectives of the ecb can be explained ex ante and the implementation of those aims can be explained ex post. a clear target is an important means of achieving transparency and accountability, i. e. of communicating with the financial markets, policy - makers and the general public. defining the objective will not be an easy matter in the new circumstances. the emi has sketched two alternative strategies for monetary policy in emu, one based on monetary aggregates and the other on a direct inflation target. the former has historically worked well in germany whereas the latter has produced good results in recent years in countries such as the united kingdom, sweden and finland, where demand - for - money functions have not been stable enough for targeting purposes. although theoretically pure forms of the two strategies can be distinguished, in practice most central banks rely on elements of both. thus, in the light of the internal decision - making process of the central bank, the strategic choice is not as crucial as it seems on the surface. both strategies are forward - looking and both aim at the same ultimate goal - price stability. a big challenge concerning the efficiency of the monetary policy is the credibility of the escb. besides our lack of empirical evidence on the europe - wide transmission mechanism, we have no evidence on the behaviour of the ecb, i. e. the ecb has no track record of its own. fortunately however, the ecb need not be built up from scratch. first, it will inherit credibility from the present ncbs, which have all conducted monetary policies aimed at price stability and convergence in accord with the principles of the maast