historical and geographical reasons, our country is exposed to a considerable commercial risk in europe : 60 % of our exports are destined for european countries ; accounting for 25 %, germany ranks first among our export markets. these european markets are no longer the most dynamic today, nor will they be in the future. it is essential that we step up the diversification process so as to ensure the expansion of our export sector. it is therefore in our own best interests to strengthen economic relations with asia, in particular with china. business relations between industrialised countries and china currently take centre stage in political discussions. in particular, harsh criticism has been levelled at china because of its exchange rate policy of pegging its currency to the us dollar despite the fact that it has made considerable progress in terms of efficiency. as a representative of a country that has had floating exchange rates for over thirty years now, i can only underscore the importance of an exchange rate regime that reflects the realities of the market. during the past three decades, the swiss franc has been an essential factor in the development of the swiss economy. however, it was never a reason for our exporters to sit back and relax. on the contrary, the franc put pressure on them to become more efficient and to specialise in those product areas in which we have a real competitive edge. consumers also profited from the strong swiss franc in that the prices for imported goods have fallen significantly. a currency that is accurately priced enables the economy to benefit from improvements in its terms of trade triggered by productivity increases. if a country ’ s currency is undervalued, products are sold on the market at give - away prices, and productive resources are inefficiently allocated. the functioning of a currency system, therefore, plays a pivotal role in the development of a country ’ s prosperity, and monetary reform, as china is currently expected to tackle, is a very delicate undertaking. unless new monetary rules and mechanisms can immediately convince the market of the appropriateness of the new regime, a risk of speculative pressure will emerge. switzerland has experience in this regard as well. we ultimately opted for flexible exchange rates, i. e. a system in which the swiss franc ’ s value is continuously in line with market forces. in my view, floating rates are not a panacea, they can be volatile in the case of market disruption. at times, the swiss franc was pushed to levels no longer compatible with the economic reality of

jean - pierre roth : switzerland - small, but global speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the swiss chinese chamber of commerce ( swisscham ), beijing, 10 june 2005. * * * i am pleased to be a guest here today at the swiss - chinese chamber of commerce and speak a few words to you. i am sure it is not necessary to convince any of you of the importance of globalisation and trade. you are living proof of our export sector ’ s dynamism and willingness to adapt to changing circumstances. by your presence in china, you contribute not only to our country ’ s influence abroad, but also to the expansion of its economy. as you know, economic globalisation often gets bad press in switzerland. some of our fellow citizens condemn it, hoping that barriers to delocalisation might strengthen the situation on our labour market. but let ’ s not be led astray by these scaremongers! those who succumb to those fears fall victim to an illusion. a policy of inactivity is not synonymous with consolidation, but with decline. it is important to realise that swiss investment abroad, particularly in low - wage countries, secures the high added value jobs we have at home. as a small country, we therefore have no other choice but to trade with the rest of the world if we want to prosper. this means that we will be continuously faced with the challenge of international competition. nevertheless, for many observers, switzerland remains a tiny spot on the european map, a country of 7. 5 million inhabitants completely surrounded by the european union whose population has already grown to several hundred million. our geographical position obviously puts the question of joining the european union squarely in the centre of often heated debates. for our economy, however, the real challenge is not to become more european, but to open up further to global markets. today, switzerland is more than merely a quaint little country for tourists ; it is not only home to watchmakers and bankers or trains that run on time. this cliche is a thing of the past. switzerland today is a global production platform with 4 million jobs within its borders and 1. 8 million people working in swiss companies abroad. this ratio is unique for an industrialised country. it is the result of a long tradition of switzerland ’ s presence abroad. we are all familiar with the big names in our industry which, as early as the beginning of