The Long Path to Restoring Faith in Financial Markets

Jean-Pierre Roth, Chairman of the Governing Board

Swiss-American Chamber of Commerce, Zurich, 04.09.2002

The world economy has been in a difficult situation for more than a year. Economic activity declined due to a sharp correction in capital spending, which coincided with a loss in business confidence. The path to economic recovery has been overshadowed by the recent loss in investor confidence, which found its origins in the highly publicized scandals involving fraudulent balance sheets. Trust in financial markets and the conviction that the right rules are in place and are being enforced were undermined by these developments.

In his speech to members of the Swiss-American Chamber of Commerce, Jean-Pierre Roth, Chairman of the Board of the Swiss National Bank, expresses his confidence that rules will emerge, which will restore trust in financial markets. But consensus will not be reached overnight, he warns. Corporations must continue to build on the social capital that is entrusted to them by investors. They should promote efficiency in financial operations and optimize the benefits that markets can bring to everyone in society. However, as long as the rules of the game value short-term gain higher than long-term stability in earnings, the temptation to lead markets astray by manipulation will remain strong. Investment will always be related to risk - reforms cannot eliminate risk. But companies can do more to promote transparency and ensure that risks are properly disclosed in their reporting. It is thus vital for companies - as it is for politicians and the public - to identify weaknesses in legislation or regulation in order to contribute to restoring investor confidence.