EMU and The Swiss Franc

Abstract

Even if Switzerland is not in a position to join the upcoming EMU at the outset, we are observing the convergence process with great interest. Given the importance of our relations with many European countries, the economic consequences of the introduction of EMU certainly cannot be neglected. The timing of the introduction of EMU and the stability of the future single currency will have a highly significant impact on economic developments in Europe as well as in Switzerland. Also, many uncertainties remain such as final decisions concerning a stability pact, the introduction of an EMS II, the setting of the exchange rate parities, as well as the development of economic growth in Europe and the expectations of the financial markets. In order to try to discern the precise effects which the future development of EMU will have on the Swiss capital and labor markets, we distinguish the following four scenarios: