the theme of today ’ s congress : the much greater role of emerging economies. their performance in the aftermath of the crisis has been impressive. diverging economic performance between the emerging economies and the advanced economies had been evident for at least a decade. but after the crisis, there was a dramatic widening in the divergence. initially after the “ lehman shock ” of september 2008, economic activity contracted sharply in both advanced and emerging economies. but a two - speed recovery quickly became evident. the emerging economies have returned to their pre - crisis economic dynamism very rapidly, while the advanced economies have experienced the slow pace of growth that is typical for recoveries following profound financial crises. to this day, most of the advanced economies are only close to, or have just recovered, their production levels pre - lehman. in contrast, output in the main emerging economies is now already 20 % higher than it was before. in the past, shocks in advanced economies often caused enduring drags on emerging economies. the latin american debt crisis of the 1980s was a prominent example. but now, economic reform and strengthened institutions in the emerging world have changed this pattern. generally, these economies have built enough financial, fiscal and external buffers to dampen international spillovers. the second feature i would like to highlight is the asymmetry between the rising role of the emerging economies in trade and their still lagging role in finance. they are giants in trade, but their financial linkages to the rest of the world are still developing. indeed, they are much bis central bankers ’ speeches more open in terms of trade : trade openness is close to 60 % of gdp, whereas the same measure based on financial flows is less than 15 % of gdp. the third feature is the relevance of emerging economies for the euro area. they account for roughly one third of our external trade, up from a quarter ten years ago. interestingly, this increase in the weight of emerging economies has improved the price competitiveness of the euro area, because on average they have had higher inflation than us. at the same time, their higher inflation has not fed into higher euro area prices, because their goods were much cheaper to begin with and because of an increasing share of imports from these countries. the euro area also benefits from trade with emerging economies in terms of product specialisation. we have a comparative advantage in mid - technology exports, while the most dynamic emerging economies focus on either high - tech or low - tech good. thus, those economies

monetary policy also played a supporting role. despite this positive bill of health compared to other countries, the crisis has clearly left its mark on switzerland too. for example, unemployment has risen markedly and manufacturing is suffering from the continuing low level of technical capacity utilisation. finally, the events of the past two and a half years have shown exactly how vulnerable our country is in the event of a banking crisis, particularly one involving large banking institutions. i would therefore like to begin by outlining a few of the swiss national bank ’ s thoughts on the “ too big to fail ” issue. i will then briefly review our monetary policy in 2009, and describe the challenges facing the snb in this area. in the final part of my speech, i will address the recent discussion surrounding the appropriate level of inflation. ii. the “ too big to fail ” issue without appropriate countermeasures, switzerland would remain very exposed to any fallout from a banking crisis. true, the big banks have substantially cut their balance sheets, something which the snb explicitly welcomes. yet the size of those balance sheets still represents a multiple of our country ’ s gdp. and the big banks continue to hold a dominant position in domestic lending and investment business. they are thus still “ too big to fail ”. in a comparable crisis, the government and the snb would once again face an impossible choice : either they accept the devastating consequences of a big bank failure for the swiss economy, or they take on the considerable financial risk of stabilisation measures. in the worst case scenario, it is even conceivable that the funds needed to provide such support would exceed our country ’ s financial resources. the lion ’ s share of the burden from the measures taken to stabilise the swiss financial centre was borne by the snb. for this reason, it has been a staunch advocate of addressing and remedying the “ too big to fail ” issue. the snb has always stressed the need for a political decision in this regard. in november 2009, the federal council appointed a commission of experts, whose mandate is to formulate possible approaches for resolving the “ too big to fail ” issue. the snb is represented by its vice president, thomas jordan. the commission published its interim report last week. the report proposes measures in the areas of capital, liquidity, risk diversification and organisational structure. these measures are designed, first, to be preventative, reducing the likelihood of failure by a systemically