Topics: Inflation, European Union, Switzerland Pages: 5 (1661 words) Published: March 8, 2013

With a more then 700 years old history, Switzerland was founded in the 13th Century. On First of August, when History and Tradition meet to find their Origins, the whole Country celebrates the first alliances from the Villages around the Lake Lucerne, also known as the ‘Rütlischwur’ in Willhem Tell’s drama by Friedrich Schiller.

Switzerland, located in the very heart of Central Europe, has an estimated Population of 7.8mn habitants, and is therefore one of the smallest Countries within the European Continent. Demographically, the Statistic with Key Figures for 2010 shows a very healthy Proportion between Women (50.7%) and Men (49.3%), whereas the majority of persons with age between 20 and 64 (62.3%) (Swiss Federal Statistical Office, 2011).

The Swiss Constitution of 1848 is among the oldest one of the world and created the Foundation of the today’s modern state of Switzerland. The Federal System consists of the federal government, a total of 26 cantons (20 full and 6 half-cantons) and communes, whereas the two latter are largely autonomous and have a high degree of independence. Every Canton has its own Constitution and retains attributes of sovereignty, such as fiscal autonomy and the right to manage internal cantonal affairs. The Swiss Citizens are the Sovereign of the Confederation, which uses a system of direct democracy. The Sovereign is asked several times during the year to vote on different political issues. The seven-member Government, also known as the Federal Council or ‘Bundesrat’, holds the Executive Power (Federal Department of Foreign Affairs, 2010)

In terms of Trades, the European Union and particularly its Western Members plays an important role in the development of the Swiss Economy, as it is the largest trading Partner. On the other hand, Switzerland is also a major and important Trading Partner for the EU, in particular for commercial services. In 1992 Switzerland signed the Agreement on the European Economic Area (EEA), which later became the European Union. However, the Swiss Citizens and therefore the Sovereign rejected in the same year the ratification of the Agreement (an example for the direct democracy in Switzerland). The consequences were not to be underestimated. The eventual loss of an important Trading Partner, such as the European Community, and the major negative impact on the economical development of Switzerland would have been huge. Berne, the Swiss Capital, was enormously interested in minimizing the risk of economical downfall and enforced the engagement for free trade agreements with the European Union (EU) in different sectors, such as Agricultural Products, Public Procurement, Conformity Assessments, Air Transport, Transport by Road and Rail, the Schengen (European Commission Trade, 2009). The bilateral contracts between the two parties ensure Switzerland not only sovereignty rights, but also allow the Confederation an open policy and close collaboration with all its European neighbors (Federal Department of Foreign Affairs, Federal Department of Economic Affairs, 2011).

Switzerland, as a non-EU Member, conducts its own and independent Monetary Policy. The primary goals of the Swiss National Bank (SNB) are to pursuing a monetary Policy serving the interests of the country as a whole and ensuring price stability. The Institution plays an important role in the actual on-going Swiss economical situation. Their recent interventions will be explained shortly (Swiss National Bank, 2011)

Historical and Actual Economic Situation

The Confederation relies on a very stable economical growth, based on a highly qualified labor force performing highly skilled work. The Swiss labor forces are divided in three different economical sectors:

* Primary Sector, including Agriculture, hunting, forestry, fishing and non farming * Secondary Sector, including Manufactory and construction * Tertiary Sector, including Services

The minority of workers are...
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