In a few months' time the European countries surrounding us will start a process of monetary transformation. It is an ambitious project which will crown the post-war efforts at economic integration.

The advent of the euro will change Switzerland's foreign trade environment. The Swiss franc will tend to lose in significance as a means of payment. Consequently, the Swiss economy will be exposed to increased exchange rate risks.

The introduction of the euro represents a factor of uncertainty for the Swiss franc. Although every precaution has been taken to guarantee the stability of the single currency, it cannot be ruled out that the relation between the Swiss franc and the euro will be more volatile than the exchange rate between the Swiss franc and the DM has been in recent years.

Our current monetary policy has been designed, as far as possible, to prevent any instabilities of the Swiss franc but the possibility of stronger exchange rate fluctuations continues to exist. It is therefore vital for export enterprises to hedge against exchange rate risks. These efforts may not be restricted to shifting the euro risk to other production levels or to salaries and wages.

Only a preventive policy by the SNB and an adequate hedging of the exchange rate risk by exporting firms will afford the Swiss economy maximum protection against possible turbulence on the introduction of the euro.