However, before the agreements can take effect they will have to pass a public referendum in Switzerland and be ratified by all 15 EU member states. A public initiative which passed in 1998, essentially requires the federal budget to be balanced and the government will thus have to reduce the deficit to less than one billion Swiss Francs by 2001 through strictly controlling expenditures. Modest economic recovery began in 1997 and annual GDP growth is expected to be 1.9 percent in 1999 and around 2.0 percent in 2000. Most of the funds are being spent in the construction sector to renovate public infrastructure. The primary objective of the SNB's policy is price stability.
Monetary policy is conducted through open market operations.
The discount rate is used by the SNB only as a signal to the public. The Swiss Franc is not pegged to any foreign currency. The SNB has shown its willingness to follow an accommodating money supply policy, even to exceed money supply growth targets when necessary, to hold the value of the franc down. Few structural policies have a significant effect on U.S. exports. Two exceptions are telecommunications and agriculture.