Finding the right title for this area was, ultimately, a losing struggle. We wanted to find a term to describe how government monetary, credit and exchange rate policy impacted the economy. We ended up with a somewhat misleading hybrid.

Whatever it is called, this area has been an area of competitive strength for the Czech Republic. In 3 of the 7 indicators, the country achieved a competitive advantage. In only one indicator did the country perform well below the EU average - interest rate spreads - and, given what we now know of the credit bubble, perhaps even this area might be considered a strength in retrospect.

Strengths. Access to capital - whatever access remains - seems to have better potential in the Czech Republic than in other EU countries. Money market rates and the 3 month interest rate are much better than the EU average.

This may be helped by credit monitoring through credit bureaux. 57,2% of the population is covered by these risk-lowering policy instruments, which is 28% higher than the EU average. Such coverage will play an accelerating function when credit starts flowing again.

Weakness. The interest rate spread is dramatically higher than the EU average. However, these 2007 numbers may reflect a more realistic and traditional view of the banking business than existed in other markets.

The one potential area of weakness over the coming years is exchange rate stability. A strong and weak crown has been a dominant influence on the economy in the past 18 months. Such instability adds to unpredictability, and enough unpredictability already exists without the currency sloshing around. Countries which have adopted the euro have had much less instability.