It could thus become increasingly difficult for us to defend our own interests. Enlargement is therefore very likely to influence our relationship with the EU. Let me now move to one of the key features of our economy: our financial sector, which currently also faces some major challenges. 4. Switzerland as a European financial centre  Since the beginning of the last century the Swiss financial sector has been a mainstay of our economy. It accounts for just under 6% of total employment, but currently generates over 10% of the country’s GDP. Relatively speaking, therefore, it is more than twice as big as the German or French financial sectors, for example. Switzerland’s globally active big banks and insurance groups are also major international competitors in most market segments. The two big banks are among the world’s ten largest banks. In terms of value added by the financial sector, Switzerland occupies fourth place behind New York, London and Paris, but is ahead of Frankfurt. Switzerland plays a leading role in banking, above all, in asset management. Almost four trillion francs worth of assets are managed in Switzerland. This accounts for around one-third of the world’s portfolios of cross-border investments. Over the last 10 years, our financial institutions have also greatly expanded their activities abroad on a global basis. In 2000 the value of their foreign investments amounted to some 54 billion Swiss francs, which is equivalent to around 14% of total Swiss investments abroad. Switzerland is also a magnet for foreign banks.
In a boom phase such a policy will tend to have a restrictive effect and in a cyclical downturn it will tend to have an expansionary impact. ·  The second element is an inflation forecast. We publish a quarterly forecast of medium-term inflation. Not only does our forecast provide extremely valuable information on the future effect of monetary policy; it also plays a key role in explaining the central bank action to the public. ·  The third element is the publication of a target range for the three-month interest rate. The target range sets the parameters for day-to-day implementation of monetary policy. Our experience with the new approach is positive. We have been able to enhance the transparency of monetary policy and to simplify lines of communication with the market. How do we take account of the fact that Switzerland is now fully surrounded by the euro zone? Indeed, the introduction of the single European currency at the start of 1999 has profoundly changed the environment for our monetary policy. But the fears that were expressed when the euro was introduced four years ago failed to materialise. In particular, the Swiss franc is no more volatile against the euro than it had previously been against the D-mark. Immediately following the introduction of the euro it remained remarkably stable for more than a year. This was due in part to the fact that the economies of Switzerland and the euro area were strongly converging and that both central banks were pursuing a similar monetary policy.