Both the basic interdependencies previously mentioned and current events, which are reflected in the relevant economic indicators, must be factors influencing the decision-making process. As a small and open economy, Switzerland is highly integrated in international economic relations. By participating in international cooperation, the Swiss National Bank contributes to creating favourable conditions for an international division of labour. In this context, stable currency relations are crucial. Such relations are ultimately a result of sustained convergence of sound economic policies implemented by individual countries. With an increasing international integration of individual economies, the awareness of mutual dependence has also grown. Accordingly, efforts to coordinate the behaviour of individual countries in the field of economic policy have been reinforced. In this context, it is important to realise that the stability of international economic and monetary relations is not primarily a matter of institutional regulations. What is of the essence is the conduct of individual countries. These considerations are also relevant for an assessment of the European Monetary Union. Creating the Union at the beginning of this year meant a big step forward for the process of European integration. With the European Monetary Union, the participating Western European countries are trying to put their currency relations on a new footing in line with the changed environment. If the European Monetary Union can be implemented according to plan, this will vastly improve the preconditions for a balanced economic development in Europe. Freedom of movement for persons will be facilitated along with the free flow of goods, services and capital.

It seems quite remarkable that all major banks in industrial countries are currently concerned with their strategy in this field. The future development in portfolio management is of particular significance to us. This is the core business of the Swiss financial industry. Further progress will depend in large measure on what the outlined background conditions will look like in future. In this context, it is the overall situation that counts rather than conditions in a certain area. Outlook At the turn of the century, Switzerland is economically and socially in good condition. Following years of frequently painful adjustments to a changing environment, preconditions for a balanced development are favourable. The quality and scope of these adjustments bear witness to the flexibility of our economy and society. The years ahead will continue to be characterised by constant change. It is therefore important to remain vigilant. On the basis of overall economic as well as social stability, innovative power and flexibility must be preserved. In a mature society, this represents a particular challenge. By keeping our own house in order, we also make the best possible contribution to international solidarity. In the narrower European context, our bilateral agreements with the European Union will form a good basis for cooperation in the coming years. In Europe and beyond, Switzerland traditionally has an extensive network of international relations which we shall continue to cultivate in the future. As far as these relations are of a political nature, an appropriate social consensus is necessary for doing so.