The IMF mission found that Switzerland responded better than expected to the franc's appreciation and weak external demand. Nevertheless, the lagged effects of past exchange rate appreciation continue to be clearly felt in some sectors. The growth outlook thus remains modest for both 2013 and 2014. The IMF mission expects inflation to turn positive at the start of 2014.
Against this background, the IMF supports the Swiss National Bank's exchange rate floor of CHF 1.20 per euro. In the IMF's opinion, this should be maintained as long as an economic is not firmly under way and inflationary risks are not visible. In case of renewed appreciation pressures, the IMF believes that the SNB should introduce negative interest rates on excess bank reserves at the SNB. If the SNB's balance sheet risks grow, more aggressive profit retention and capital building would be advisable according to the IMF.
The IMF recognised the key importance of the debt brake for ensuring fiscal discipline and reducing public debt. So long as the debt brake permits it, however, the IMF believes that a more supportive fiscal stance would be warranted in the current environment.
The IMF mission supports the measures taken by the Swiss authorities to cool off the mortgage market and real estate sector. If the risks continue to build in this area, the authorities should stand ready to implement additional measures according to the IMF.
Finally, the IMF recognises the rapid progress made in financial sector regulation, particularly in the area of banking and insurance, in line with international initiatives. The IMF believes that further progress is necessary in terms of cooperation with foreign authorities on devising plans for the cross-border resolution of large institutions. Moreover, it points to the need to enhance transparency regarding the risk weighting of big banks' assets.
The IMF delegation conducted the annual country evaluation in Bern and Zurich from 8 to 18 March 2013. The regular evaluation of the economic and financial policies of its member states in the context of the so-called Article IV Consultation is a core element of the IMF's economic policy monitoring activity.
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Federal Department of Finance
Switzerland—2013 Article for Consultation / Preliminary Conclusions (pdf, 37kb)