Euro, schweizerische Geldpolitik und Zinssätze

Georg Rich, Chief economist at Swiss National Bank

Conference «Euro und Kapitalmärkte», organised by Management Circle, 12.05.1998

The speech addresses three questions arising from the introduction of the euro that greatly concern the Swiss public. First, there is widespread fear that the completion of European Monetary Union will cause the Swiss franc to appreciate and will thus undermine the competitive position of Swiss exporters. However, these fears are exaggerated because the doubts about the stability of the euro, harboured by many investors, have already been incorporated a long time ago in the exchange rates of the Swiss Franc against the European currencies. Second, the speech shows how the Swiss National Bank can counteract undesirable movements in the Swiss franc exchange rate. Finally, it deals with the interest rate differential between Swiss franc and other European assets. According to the author, the often expressed concern that after the switch to the euro, Swiss interest rates will rise to or at least approach their European equivalents is hardly justified. These concerns derive from questionable explanations for the existence of the interest rate differential. The speech provides a new - and hopefully better - explanation.