Switzerland at the heart of Euroland

University of Lausanne, Lausanne, 21 January 2003, 21.01.2003

  • Complete text in French: "La Suisse au coeur de l'Euroland"
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What lessons can we draw from the recent process of economic and monetary integration initiated by the European Union? In the first decade of the single market, a new economic landscape has emerged: the countries in the centre of Europe are suffering from a lack of growth while the peripheral countries are recording high growth rates. Since the national currencies were replaced by the euro, the exchange rate has ceased to function as a balancing mechanism. As a consequence, the competitiveness of the individual countries converges through the different development of inflation.

Where is Switzerland's place in this new economic landscape? What lessons can we learn for a possible integration of Switzerland into the European Monetary Union? As recent developments in Euroland have shown, economic integration works in a way that would probably leave the Swiss economy in a rather uncomfortable position. Not only would it lose its substantial financing advantage (lower interest rate level), but it would also have to deal with a faster increase in the domestic price level than many of its European competitors.