While Greece, with its strategic position between Asia and Central Europe, has long been exposed to commerce, Switzerland, a country without natural resources, has in some sense been forced to embrace trade in order to survive. Switzerland has now become a global player. Today, the “cliche” of Switzerland as an isolated country with its citizens “entrenched in the Alps, living happily and looking after their cows” totally belies the facts. We tend to easily forget that exports of goods and services account for more than 40 percent of our gross domestic product and that the European market absorbs about two thirds of our exports. The presence of Swiss firms in European countries is also very pronounced, with more jobs created abroad than at home in recent years. In 2002, Swiss direct investments in Europe represented around 7 billion euros, i.e. 13.5 percent of total investments in Switzerland, and Swiss firms employed close to one million people in Europe, equivalent to about one quarter of Swiss employment. Around 9’000 of those employees are living in Greece. My purpose here is not to brag about the Swiss economy, but to emphasize the fact that Switzerland is very open to international trade, investment, and migration, and that our economy is very integrated in the global economy and intimately linked to the euro zone. Swiss monetary policy With those facts in mind, you might wonder whether Switzerland, a highly integrated country surrounded by trading partners sharing the euro, can still follow an autonomous monetary policy.
If markets were anticipating such an evolution, spreads between the Swiss franc and euro deposits would progressively shrink, in the same way spreads between German marks and French francs deposits fell in the 1990s during the build-up of the monetary union. Market pressures could then force the SNB to shadow the monetary policy of the European Central Bank. Many observers overlook the fact that, contrary to other countries which have gained an interest rate bonus by joining the European monetary union, as they previously had higher interest rates than Germany, Switzerland would loose its interest rate advantage in joining the monetary union. No tendency of a convergence in interest rates has been observed over the past few years. On the contrary, the interest differential has broadened slightly. For the time being, markets are not expecting any move from Switzerland towards monetary union, and rightly so, I might add. This does not mean that my country will never join the EU. As you probably know, important decisions shaping the relations between the EU and Switzerland have been taken in recent years. A first set of bilateral agreements has already come into effect. It gives us access to the single market and ensures labor mobility. New agreements have now been negotiated with the aim of harmonizing taxation on savings and integrating Switzerland in the Schengen and Dublin frameworks, a further step toward closer cooperation. As you see, without being formally an EU member, Switzerland is increasingly part of the European reality.