in euros. swiss suppliers have increasingly been requested to provide euro - denominated invoicing. it is unclear to what extent inter - company payments in switzerland are effected in euros. there is agreement, however, that these payments have increased compared with last year's survey and that this trend is likely to continue in future. wage and salary payments in euros are still not an issue. employees would not accept wage and salary payments in euros. furthermore, such a practice would result in substantial administrative complications ( social security deductions and taxes in swiss francs ). the selective use of euros in place of the swiss franc does not create any difficulty with regard to monetary policy. on the one hand, the bulk of payments in switzerland will probably continue to be effected in swiss francs also in future. on the other hand, under the current monetary policy strategy, a possible euro - induced decline in the demand for money will not lead to any problems either. contrary to the previous policy of targeting the money supply, the steering of the interest rate the national bank pursues today is not dependent on a stable demand for money. the national bank realises, however, that, as invoicing in euros becomes more widespread, our export industry must bear higher exchange rate risks.

in profits. the aggregate profit was down by 21 % compared with the yearearlier period. despite the regrettable case of banque cantonale vaudoise, the overall situation is favourable as far as equity ratios are concerned : all banks continue to meet the capital adequacy requirements. the average capital ratios of all banks ( excluding the big banks, september ) exceeded the regulatory minimum by 79 %. 98 % of banks reported at least a 20 % capital surplus. the overall picture can be characterised as follows : the swiss banking sector suffers from uncertain economic prospects and the tense situation on the financial markets. many financial institutions are forced to take corrective action. measures taken range from cost cuts, streamlining the product line, decreasing risk exposure, continued tightening of risk and liquidity management to capital increases and mergers. for the most part, these measures are implemented without delay. plans for cooperation on a logistical level and in connection with raising capital have become more attractive as well. it is to be hoped, however, that the reluctance to give up an often only presumed autonomy will be overcome sooner rather than later. the idea that a bank is only a « real bank » if it is itself involved in the entire value chain as much as possible is a thing of the past. moreover, further development will depend heavily on the economic trend and the stabilisation on the financial markets. two things merit particular mention : firstly, the capital ratio of swiss banks is on a comfortable level overall, allowing them to act from a position of strength. secondly, banks in switzerland have mostly used the prosperous years since the end of the nineties to bring their lending business in line with the risks and to reform their liquidity and risk management. under the current difficult circumstances, these efforts are now paying off. in other words, the problems facing the swiss banking system will be solved. the banks in switzerland have the necessary strength. structural changes are taking place at a fast pace and are likely to progress even more quickly. the banking system may be undergoing radical changes, but is nevertheless stable. the role of the euro in payment transactions a little less than a year ago, the euro was introduced in the european monetary union in its physical form. in the summer of 2001, in the run - up to the launch of euro cash, the national bank held talks with over 100 swiss companies and associations querying them on their expectations in connection with euro coins and banknotes as well as their experiences so far with the euro as