The launch of the euro proceeded without a hitch. The markets remained calm, and the exchange rate of the Swiss franc against the euro showed a remarkably steady development.

The initial euphoria was dampened somewhat when the euro weakened against the dollar and by the public debate on the interest rate policy of the European Central Bank (ECB).

Lately, the situation has stabilised. The euro/dollar exchange rate has adjusted to the diverging economic prospects on both sides of the Atlantic, and the recent lowering of European interest rates has silenced speculation concerning the policy of the ECB.

From the Swiss point of view, the experience with the euro has so far been positive. The single currency is increasingly being used as an accounting unit. So long as the euro is, however, not used as a payment instrument by the public at large, there will be no conspicuous developments in this field. The euro seems to be gaining ground in Switzerland at the same leisurely pace as in the countries of the European Union.

The positive experience of the past few months strengthens our confidence that the relation between the Swiss franc and the euro will also remain stable in future. Underlying economic factors in the respective countries for the time being play a significant role. The extremely convergent economic policy pursued by Switzerland and its neighbours is the best guarantee for maintaining relative stability.

Nevertheless, after only a few months' experience with the new currency it is still too soon to draw final conclusions. Conducting monetary policy in the European Union is a delicate undertaking given the regional economic disparities. Markets and politicians are continuing to follow the activities of the ECB with a critical eye.

Under these circumstances, however, allround vigilence is of the essence; Swiss enterprises should not harbour the illusion that an exchange rate risk between the Swiss franc and the euro no longer exists. And as far as the National Bank is concerned, the imponderables characterising the European environment remain an important element in assessing the situation.