Our monetary policy, with the negative interest rate and our willingness to intervene in the foreign exchange market as necessary, is not designed to give Switzerland an unfair advantage in international trade – to support an expansion of the current account surplus in any mercantilist sense. Rather, it is a necessary response to excessive upward pressure on the Swiss franc due to its perceived safe-haven status and is intended to ensure price stability. After all, the Swiss franc remains highly valued – even if, at first glance, the current account seems to suggest otherwise. Let me begin by putting the debate on the current account into context. I will then analyse the key factors for the current account surplus in Switzerland in more detail and draw some conclusions for our monetary policy. Basis for the current account First, I would like to remind you of the definition of the current account. Definition of the current account The current account balance corresponds to receipts minus expenses from trade in goods and services, net labour and investment income, as well as the net current transfers of an economy. 2 Equation 1 describes this relationship. The trade account has a surplus when a country exports more goods and services than it imports. And vice versa, a country has a trade account deficit when it imports more goods and services than it exports. Net investment income receipts include, in particular, interest on foreign bonds and dividends on foreign equity held by resident investors.
Retail activity, which was buoyant in May, fell back in June partly due to poor weather conditions. In aggregate, activity was up over the last two months. The construction and civil engineering sector1 recovered in the second quarter of 1997 primarily as a result of seasonal factors. Employment levels held steady in industry, except for the automobile sector, where there was a further contraction, and the building, retail and market services sectors. Wherever possible, companies sought to enhance workforce flexibility via temporary staff and overtime, in order to cope with fluctuating demand and organize themselves for the summer vacation period. __________________ 1  Unadjusted data. BIS Review 70/1997