The Swiss franc and the globalisation marathon
Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank
Business Club Zürich, Zürich, 22.09.2005
Complete text in German: "Der Franken im Globalisierungsmarathon"PDF (130 KB)
Switzerland’s current prosperity is based on diligence, hard work, innovation and openness. For Swiss entrepreneurs, the concept of openness includes the ability to adjust to varying degrees of currency volatility. In this respect the CHF/USD exchange rate poses greater challenges than the CHF/Euro rate. Since the launch of the Euro, the volatility of exchange rates in Europe has declined considerably. As the Chinese currency becomes increasingly flexible, the importance of the US dollar for the Swiss export industry is likely to recede slightly while Asian currencies tend to become a little more significant.
Despite a certain degree of exchange rate volatility, it would not make sense to peg the Swiss franc against any other currency. For Switzerland, a flexible, independent monetary policy is the better strategy for maintaining price stability. Moreover, the increasing openness of Switzerland towards the global economy could serve to counter the upwards trend of the Swiss franc in real terms that has persisted for a long time, through an inverse Balassa-Samuelson effect. Switzerland's success in a globalised world economy is critically dependent upon its ingrained hard work ethos together with the requisite openness and flexibility.