Switzerland is the 36th largest economy, with a GDP of $388 million in 2006, and a population of 7.5 million people. With its lon-term monetary security, stability, and bank secrecy, Switzerland is a destination for assets that are seeking a "safe haven." The economy is increasingly dependant on foreign investment and money flows. The country's small size and highly skilled labor force make industry and trade the central part of the economy. With its location in the heart of Europe, the Euro-zone is the country's most important trading partner. The economy also currently has a low interest rate (2.75%), which makes the Swiss Franc a funding currency for carry trade.

Switzerland Economy Built on Trade: Though the Swiss economy is known for its banking system, its industries make up 30% of GDP, and for its size it is the 19th largest exporter. Swiss exports include machinery, metals, electronics, and chemical sectors are known for their precision and quality. These sectors account for well over half of Switzerland's export revenue. 70% of Swiss exports go to the European Union. Germany leads the list of countries that imports Switzerland's goods at 20%, with the US and France second at 9%. The US is also the largest foreign investor in Switzerland. Therefore the Swiss economy is dependent on global growth, especially in Europe, the UK and the United States, as those are the biggest markets for Swiss exports.

Franc as a Funding Currency in Carry Trade: With its low interest rate the Swiss Franc has been used as a funding currency for carry trade. An investor borrows in Francs and puts the money into a higher yielding asset, such as the Pound, earning the spread on between the interest rates. Except for a period in early 2007, the GBP/CHF pair has been climbing as UK growth had been strong and market conditions were favorable. Starting with July of 2007, the Pound has come under pressure as investors rushed to pat back the borrowed Francs, increasing its value.