Switzerland: 2012 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; Statement by the Executive Director for Switzerland
IMF Staff Country Reports, May 8, 2012
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- Switzerland: 2012 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; Statement by the Executive Director for Switzerland
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Bibliographic details
- Published: May 8, 2012
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475503395.002
Exchange rate policy and effects
- Switzerland’s exchange rate floor, seen as credible by the markets, has halted appreciation and helped shore up the economy.
- Once growth recovers and inflation reaches more comfortable levels, maintaining the exchange rate commitment risks stoking inflation and hence, a return to free floating would be desirable.
- Subject tags include: Exchange rates, Foreign exchange, appreciation, exchange rate floor, exchange rate appreciation, commitment risk.
Inflation and growth outlook
- The report links the exchange rate commitment to inflation dynamics: sustaining the exchange rate floor beyond recovery risks higher inflation.
- Keywords/concerns include: Inflation, inflation outlook, Prices.
Financial sector risks and macroprudential response
- The risk of a real estate bubble has been heightened by loose monetary conditions.
- New macroprudential instruments are under consideration to address this risk.
- Subject tags include: Banking, Financial institutions, Mortgages, Insurance companies, Basel III counter-cyclical capital buffer, policies-safeguarding credibility, risk.
Policy recommendations and considerations
- Transition policy: Return to free floating is desirable once growth recovers and inflation is at more comfortable levels to avoid stoking inflation.
- Macroprudential policy: Consideration of new macroprudential instruments to mitigate heightened real estate bubble risk.
- Financial regulation: References to Basel III counter-cyclical capital buffer as part of the policy vocabulary.