our country ’ s fundamentals. these episodes lasted for only a limited time, however. another advantage of a flexible swiss franc is that changes in the international monetary system have little bearing on our currency which is largely determined by switzerland ’ s economic realities. consequently, the launch of the euro - a major event on the monetary scene in recent years - did not lead to the disappearance or the destabilisation of the franc as feared by some. though the euro - for all intents and purposes - is accepted as a means of payment in switzerland, there are not more euros in circulation now than there were french francs or german marks prior to the monetary integration. furthermore, the calm that has characterised the foreign exchange market in europe since the disappearance of the national currencies mitigated the speculative pressures on the franc. our currency is therefore less volatile than before. last but not least, contrary to the pessimistic assumption that the swiss national bank would have to shadow the policy of the european central bank, it was able to set its interest rates according to the needs of the swiss economy. on the whole, our monetary regime passed the test imposed by the change in the european monetary system with flying colours. even though switzerland is a modest player on the international scene it carries more weight than one would imagine. the country ’ s edge lies in its small size, leaving it no other option than to open up to international trade. moreover, its liberal philosophy and sound financial standing have given it the necessary tools to conduct a policy of openness and to have a strong presence abroad. having chosen the option of free trade and free movement of capital, switzerland is, in many respects, better prepared than others to take advantage of the greater opening of the borders brought about by globalisation. to be sure, this is not an easy ride, as international competition always necessitates painful adjustments, and switzerland is no exception in this respect. when we take stock of the last few years, however, the bottom line looks favourable. we would certainly be in an even better position now, if we had built up a stronger presence in emerging economies. as you can see, contrary to what some people believe, globalisation is not the cause of the weak growth of the swiss economy ; indeed the opposite is true. foreign trade is the engine driving our economy. it has expanded in recent years in step with the global economy. by contrast, our domestic market has stagnated and registered only

g10 recommendations should be implemented in europe. the post - fsap period offers a unique window of opportunity finally, i will devote the last part of my remarks to some reflections on the strategy for financial integration going forward, now that the financial services action plan ( fsap ) is approaching its completion. i believe that there is now an excellent opportunity to devise and engage in a strategy that delivers the full potential of financial integration. but in order to reap this potential, it is essential that a consistent post - fsap strategy is adopted. i see several components in such strategy for public authorities and market participants. let me begin with the role of public authorities. first, it is crucial that authorities implement the fsap measures, which provide the legal infrastructure for a single financial market, in a coherent manner. in this respect, i would highlight the provisions of the new investment services directive, which will provide the single market for financial services with a core legislative framework. furthermore, the lamfalussy process of regulation and supervision, now being extended from the securities field to the banking and insurance sectors, will allow for more flexible and uniform technical regulations. this dynamic process should ultimately produce a genuine common financial legislation and regulation for market players, while respecting the principle of subsidiarity enshrined in the treaty. second, there may be scope for simplifying the current regulatory framework, thereby reducing the corresponding regulatory burden on financial institutions. the implementation of fsap measures and of the the so - called lamfalussy approach should not, in any respect, lead to an additional layer of complex regulation - this would run counter to the spirit of the single market as it would not provide the right incentives for market participants to extend their activities throughout the eu. in this context, i want to recall that a main objective of the lamfalussy process is to allow for more flexible and uniform technical regulations. if adopted ambitiously, such a process could lead to the development of a true eu rulebook to which institutions may refer directly for their cross - border business. third, promoting a robust supervisory and financial stability framework for integrated financial markets. as integration proceeds, financial institutions will increasingly engage in cross - border business. furthermore, this is likely to bring a change in the transmission channels for systemic risk, notably as a result of a possible increase in the risks of cross - border contagion. consequently, it is important that authorities - supervisors and central banks - seek