favourable housing market developments. third, exports were relatively resilient to international headwinds. fourth, as we have already seen, monetary policy acted to limit the negative impact of the swiss franc ’ s massive appreciation. let me now elaborate on the structural factors that have played an important role in strengthening the resilience of the swiss economy to shocks. i will start by focusing on some interesting shifts that have taken place in the structure of swiss international trade. 4. 1 innovative and diversified swiss international trade looking at the structure of switzerland ’ s international trade will allow me to dispel some wellestablished preconceptions about the swiss economy. if i asked you to list some core swiss economic sectors, you would probably mention banks, watches and chocolate. but switzerland is much more than that. the swiss economy is in fact highly diversified. for example, the share in total value added of the sector comprising financial, insurance and bis central bankers ’ speeches business services is smaller than the eu average ( 20. 3 % vs 26. 2 % in 2012, according to oecd figures ). by contrast, the share of the manufacturing sector is significantly larger. overall, the amount of goods and services that switzerland sells abroad is equivalent to half of its gross domestic product ( gdp ). goods dominate export activity but, with a share of one - third, the contribution of services is by no means negligible. the export intensity is significantly above the oecd average. switzerland is surpassed by the benelux countries, however. part of the gap with the benelux reflects the extensive re - exports of imported goods generated by the activity of the world - class ports in belgium and the netherlands. admittedly, access to the sea is not a key comparative advantage of switzerland … in order to maintain competitiveness, the swiss export sector has gone through profound structural changes during the last decades. first, there has been a shift in the composition of the export sector ( figure 4 ). the pharmaceutical industry has gained in importance, whereas the share of exports of machinery has declined. in passing, let me just mention that the popular cliche which associates switzerland with watches is actually true. their share in total goods exports is sizeable ( 11 % ). note, however, that this has nothing to do with cuckoo clocks, which were invented and are produced in germany. a closer look at the development across industries reveals that this compositional shift is important in understanding swiss performance during the crisis.

30 years ago the play of global financial markets so forcefully driven by expectations was still in its infancy. at that time it was inconceivable what we witness today : namely, that a couple of sunny days on the stock market are able to produce a gain in wealth potentially several times the size of an entire years'deficit or surplus in the current account. thirty years later, the assessment of floating exchange rates is more differentiating. the system with all its advantages and despite its drawbacks is now firmly established and has even become increasingly widespread in the past twelve years. the number of countries which allow their currency to float more or less freely without a formal peg has risen from just over 30 to approximately 100. by and large, the experience gained with floating exchange rates may be summarised in two statements : first, the system occasionally generates large real exchange rate shifts that last longer than just a few days or weeks. they may extend over several quarters or even years, long enough to cause considerable harm to the real economy. such distortions are not only observable in emerging economies but also between the currencies of the big three. one of the most spectacular distortions in the past decade was the rise and fall of the usd against the yen : up 80 % from april 95 to august 98, then down 31 % until the end of 99. more recently, the longawaited appreciation of the euro in the past 12 weeks amounts to 13 % against the usd and 20 % " the case for flexible exchange rates ", in : further essays in monetary economics, cambridge ( mass. ) 1973, p. against the yen. it took place in an environment where neither current nor expected inflation differentials have changed to any noticeable extent. second, the volatility of floating exchange rates by far exceeds the volatility of the fundamentals. it is impossible to explain short - and medium - term exchange rate fluctuations with the aid of traditional fundamental factors such as inflation and productivity differentials. against the background of such experiences, it is hardly surprising that two considerations characterise the ongoing discussion on currency regimes. first : floating versus pegging is not a question of right or wrong. what seems appropriate for one country may be a bad choice for another economy. structural differences in trade flows, productive capacities, features of the financial sector and the credibility of the political process may result in different choices. second : even among ardent protagonists of floating the dogmatic position that central banks should take an attitude