Contrary to the pessimistic assumption that the Swiss National Bank would be forced to shadow the policy of the European Central Bank, we have been able to set interest rates according to the needs of the Swiss economy. And we will continue to do so. Summing up, we are as happy as central bankers can be with the outcome of the test imposed by the change in the European monetary system. Why joining the EU and the euro is not a realistic option And what about the European issue? As you know, we are not a member of the European Union, nor do I foresee Switzerland joining the EU in the near future. The Swiss people remain sceptical about the efficiency of the Union and are very aware of what they stand to lose in terms of political rights and economic freedom in the event of integration. But our relationship with the EU is of key importance, since Europe accounts for two-thirds of our foreign trade, as I mentioned before. In order to secure our access to the European market and to avoid discrimination, we have concluded two packages of bilateral agreements with the Union – one in 2002 and one in 2004. The present situation – with free movement of goods, capital and labour, but without monetary and fiscal integration – is probably the best solution for us. In short, our relationship to Europe is well organised and established.
This situation has nothing to do with the appeal of our bank secrecy, as many believe, but with the abundance of savings and the high degree of price stability. Since the introduction of the euro in 1999, the average interest rate on three-month Swiss franc deposits – 1.4% – has been less than half the rate for euro deposits. If Switzerland were to give up its monetary independence by pegging the franc to the euro or by joining the euro area, Swiss interest rates would increase to European levels. Since higher interest rates mean lower asset prices, lower levels of investment, and also higher mortgage rates, the Swiss are, understandably, not keen on giving up their national currency. A major decision of this kind would have to be approved in a public referendum in Switzerland; the prospect of EU and euro membership in the near future is thus highly unlikely. Conclusion Having chosen the option of free trade and free movement of capital, Switzerland is, in many respects, better prepared than others to take advantage of the greater opening of borders brought about by globalisation. To be sure, this is no easy ride, as international competition always necessitates painful adjustments, and Switzerland is no exception in this respect. Given our openness, we are immediately affected by a slowdown of the world economy. On the other hand, as in the current circumstances, we can take full advantage if worldwide business activity is healthy. When we take stock of the last few years, the bottom line looks favourable.