What lessons can we draw from the recent process of economic and monetary integration initiated by the European Union? In the first decade of the single market, a new economic landscape has emerged: the countries in the centre of Europe are suffering from a lack of growth while the peripheral countries are recording high growth rates. Since the national currencies were replaced by the euro, the exchange rate has ceased to function as a balancing mechanism. As a consequence, the competitiveness of the individual countries converges through the different development of inflation.

Where is Switzerland's place in this new economic landscape? What lessons can we learn for a possible integration of Switzerland into the European Monetary Union? As recent developments in Euroland have shown, economic integration works in a way that would probably leave the Swiss economy in a rather uncomfortable position. Not only would it lose its substantial financing advantage (lower interest rate level), but it would also have to deal with a faster increase in the domestic price level than many of its European competitors.