Switzerland as a partner of the EU  Switzerland is deeply integrated in the European economy. Although it is not a member of the European Union, it has very close ties with it. The EU accounts for 60% of our exports and as much as 80 % of our imports. In 2001, one-third of the 30 billion Swiss francs that were transferred abroad in the form of Swiss direct investment went to the EU, while 80% of foreign direct investment in Switzerland came from the EU. It is therefore not surprising that the Swiss business cycle is highly correlated with the activity in the EU, and that the exchange rate between the Swiss franc and the euro is of crucial importance to us. Close economic ties also mean close institutional co-operation. An initial step in this direction was taken with the 1972 Free Trade Agreement concluded with the European Economic Community (EEC). Full membership was never a serious option. In 1992, the Swiss people even rejected the option of becoming a member of the European Economic Area. Further progress was made with the implementation, one year ago, of bilateral agreements between Switzerland and the EU. The purpose of this set of agreements is to secure for Switzerland sectoral access to the European single market. They cover seven issues, among them an agreement on labour mobility and an agreement on transportation. Since the middle of last year new negotiations have been under way between Switzerland and the EU on a further ten issues.
6  See Dong Choi, Michael R. Holcomb, and Donald P. Morgan, Bank Leverage Limits and Regulatory Arbitrage: New Evidence on a Recurring Question, Federal Reserve Bank of New York Staff Report #856 for evidence of risks-shifting in response to the imposition of the supplementary leverage ratio in the U.S.  7 See Andrew G. Haldane, “Multi-Polar Regulation,” International Journal of Central Banking, June 2015, 11(3),  385–401; “Strengthening and Streamlining Bank Capital Regulation,” Robin Greenwood, Sam Hanson, Jeremy Stein, and Adi Sunderam, Brookings Papers on Economic Activity, 479–565, Fall 2017; “Bank Capital Allocation under Multiple Constraints,” Tirupam Goel, Ulf Lewrick, and Nikola Tarashev, October 2017, BIS Working Paper #666. 8 A counterargument is that economies of scale and network effects from technology platforms could lead to  greater specialization, e.g., payments or mortgage lending. 9 See “CoVaR,” Tobias Adrian and Marcus Brunnermeier, American Economic Review, Vol. 106(7), 1705–41 and  “The Fundamental Principles of Financial Regulation,” Markus Brunnermeier, Andrew Crockett, Charles Goodhart, Avinash D. Persaud, and Hyun Shin, in Geneva Reports on the World Economy, 2009 for a broad discussion and Empirical Evidence on ‘Systemic as a Herd’: The Case of Japanese Regional Banks, Naohisa Hirakata, Yosuke Kido, and Jie Liang Thum, January 2017, for an empirical example. The literature typically focused on small firms acting in the same way, but the same principle likely applies to large firms that behave similarly to amplify systemic risk. 5/5  BIS central bankers' speeches