Swiss prepare for the euro

Just six months away: the new euro notes Keystone

Millions of Europeans are looking forward to a date in exactly six months time -January 1, 2002 - with excitement because notes and coins of the single European currency will then come into general circulation. But with the countdown underway, there's little euphoria in Switzerland.

While the move in six months time will not necessarily change the euro’s foreign exchange value, it is a psychologically important moment.

However, the average Swiss is hardly likely to be overawed by the occasion because the national currency, the Swiss franc, is not going to disappear.

“I don’t think that it’s so psychologically important for the Swiss,” Credit Suisse senior economist Fritz Stahel told swissinfo.

“We realise that another foreign currency is going to be established. That could make life easier because we’ll only have to deal with one foreign currency in Europe and not a lot of different ones like now,” he added.

Stahel said he felt the euro was going to play an important role in Switzerland but he emphasised that the Swiss franc would remain the sole legal tender.

Stahel also told swissinfo he felt the physical introduction of euro notes and coins would not affect Switzerland’s monetary policy.

“The Swiss National Bank remains independent and is going to run its own economic and monetary policy depending on economic developments in Switzerland and Euroland,” he said.

“Since the situations can vary, the Swiss National Bank will steer its policy according to the specific needs of Switzerland,” he added.

The impact of the euro for Switzerland has been felt differently in individual sectors of the Swiss economy. While the big companies have been reacting to the introduction methodically, many small and medium-sized companies have been adopting a “wait and see” attitude.

Analysts believe, however, that pricing and invoicing in the euro will be introduced by almost all companies, a move which will increase market transparency.

Special conditions apply to retail business and tourism, sectors that will have to adapt to the wishes of European customers and have to offer their products and services in euro.

Switzerland’s retail giants Migros and Co-op have said they will accept euro from their customers but will return any change in Swiss francs.

The banking industry has long been mindful of the changes involved by the introduction of European Monetary Union.

“For us at the banks, the situation was more important at the beginning of 1999 because the whole financial services industry changed to the euro then,” Stahel said.

However, the physical introduction of euro notes and coins means that bank accounts denominated in national currencies such as the German mark or French franc have to be adapted.

Stahel said he did not expect that huge number of people in Euroland would have second thoughts about the euro and change their money into Swiss francs as a currency of safe haven.

“We expect that volatility on the foreign exchange markets could increase over the year-end period for reasons of insecurity but I don’t expect a panic,” he said.

He also said that he believed that the fluctuations would only take place for a limited period.

“You must realise that the Swiss National Bank and the European Central Bank are well aware of the situation and they are prepared to intervene in a nervous market to stabilise it,” he added.

by Robert Brookes