##ibrating mechanism. the ability of labour to move within a country helps to promote an orderly adjustment process. but there are reasons to worry about imbalances in a global context. to begin with, market - based means of resolving international imbalances are somewhat less effective and potentially more disruptive. this is because there is less labour mobility across international borders, and so larger movements in relative wages and prices are needed in order for them to act as an equilibrating mechanism. further, certain national and international policies, as well as interventions in the foreign exchange market, have been inhibiting the necessary relative wage and price movements. indeed, some of these policies are making the situation worse. and so the concern is that the longer these imbalances remain unresolved, the greater the chances that the ultimate resolution will be disorderly. equally troubling, there is a greater chance of protectionist measures that can seriously damage the global economy. policy impediments to resolving imbalances let's look a bit more closely at some of the key impediments to the resolution of imbalances. some of these impediments are national policies, while others relate to the international monetary order. let me talk about national policies first. many of these impediments have been identified in discussions at the g - 7 over the past couple of years. it is clear that, to date, there has not been enough progress on structural reforms. this lack of progress is somewhat frustrating, given that there is a reasonable consensus on what should be done domestically in all countries. first, microeconomic policies should allow markets for both goods and labour to function as well as possible and with a maximum degree of flexibility. almost every country, including canada, talks a good line about this, but action has been rather slow everywhere. second, strong policies must encourage the creation and maintenance of a sound financial system that can efficiently allocate domestic and foreign savings. progress here, although slow, is taking place. the work of the financial stability forum, and the contributions in this area from the bank for international settlements, have been helpful. but much remains to be done. third, all countries must pursue fiscal policies aimed at producing a sustainable public debt - to - gdp ratio. where structural fiscal balance is absent, it should be achieved ; where it is present, it should be maintained. there are some real problems on this front in the united states, in europe, in japan,

thomas jordan : comments on swiss monetary policy speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the 108th ordinary general meeting of shareholders of the swiss national bank, berne, 29 april 2016. * * * mr president of the bank council dear shareholders dear guests our last ordinary general meeting was dominated by the discontinuation of the minimum exchange rate. the past year has been a difficult one, with the swiss economy once again demonstrating great flexibility and adaptability. it was also a year during which there has been broad discussion in the public arena of the monetary policy of the swiss national bank. it is essential that the judgements we make and the measures we take are fully understood, if our monetary policy is to be effective and trust is to be maintained in the snb. in my comments today i would therefore like to outline once again our current monetary policy and our views on key issues. i shall divide my speech into two parts. first, i will talk about economic developments and briefly recap our reasons for discontinuing the minimum exchange rate. then i will take a look at the current economic situation. in this context, i will discuss our mandate of ensuring price stability. i will conclude this part by looking ahead to the challenges that face us in the future. in the second half of my speech, i will address two ideas, which are the subject of current public debate and which would have a direct impact on the snb were they to become reality : namely the creation of a sovereign wealth fund using the snb ’ s foreign exchange reserves, and the sovereign money initiative. economic developments discontinuation of minimum exchange rate let ’ s start then by casting our minds back to last year. on 15 january 2015, the snb discontinued the minimum exchange rate of chf 1. 20 per euro. this had been introduced as a temporary measure in september 2011 in exceptional circumstances. the swiss franc ’ s safe - haven status had caused it to appreciate rapidly and sharply against virtually all currencies. the consequent massive overvaluation of the swiss franc had posed a threat to the swiss economy and carried the risk of deflation. the minimum exchange rate put a stop to these developments. in the subsequent almost three and a half years until january 2015, the situation changed fundamentally. global uncertainty eased and the swiss economy gained ground once again. by contrast, recovery in the euro area continued to be sluggish. the euro