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Frown at Swiss Economists on IMF advice

Switzerland is to keep the government spending less and spending increase. This is one of the main recommendations of the International monetary Fund (IMF) in Switzerland in the framework of its annual Country assessment (Consultation IV). Yesterday, Economists at the IMF have presented their recommendations, in the presence of representatives of the Federal government, the financial market Supervisory authority (Finma) and the Swiss national Bank in Bern. In spite of many friendly phrases, it became clear that not all the advice of the Fund to arrive.

The IMF Economist Rachel van Elkan justified its demand for more laxity in the public finances, with the weakening of the Swiss economy. Like other institutions, the IMF lowered its forecast for growth in Switzerland in the current year from 1.8 percent to 1.1 percent. In the face of great international risks, it could get even worse, said Van Elkan.

The Federal government already do a lot of

The Federal government does not use its possibilities to come up with more expenditure control, criticized the IMF-an Economist of the Swiss government. Higher expenditure is to be preferred to lower taxes, since these could hardly be more increase. The state could borrow up-to-date negative interest rates – so a little extra when he lends money, and the debt was in an international comparison, extremely low.

Serge Gaillard, chief financial officer of the Federal government, disagreed with the criticism of the IMF is to be decided. The expenditure on education had a year of 2.5 per cent, those for roads of 3 percent and those for Railways grew by 2.5 percent. 200000 had been in government-related areas, while the private sector have reduced due to the strong Swiss franc.

in opposition to the IMF: Serge Gaillard. Key/Marcel Bieri

the IMF relies on state expenditure, has to do with the monetary policy of the national Bank. Although the IMF Economists consider even deeper negative interest rates feasible, to warn, but nevertheless, the dangers of it for the financial sector of Switzerland. In the center of the real estate market is here. About 85 percent of the domestic assets of the banks are concentrated in mortgage. Even institutional investors such as pension funds and insurance companies would invest on the hunt for high returns in real estate. How big is the risk of a collapse of this market, demonstrated by the fact that the subject vacancy rates continued to rise, and prices are near historic highs.

doubt expressed the IMF-Economists finally, in relation to the adequacy of the Bank Supervisory authority Finma.

the banks want to dampen with self-regulation, the real estate demand, convinced the IMF not Economists. They also state enforcement measures and called for, among other things, higher risk capital buffer for banks according to their commitment in the mortgage business.

Finally, the IMF considers the planned Revision of the Deposit guarantee to be insufficient. In Switzerland, there is no public order equipped, sufficiently financed. In the case of the Deposit guarantee Esisuisse, this criticism is not well received. The IMF does not acknowledge the very effective hedging of the Swiss Depositor, unfortunately, as a speaker. And further: "With the planned revision of the law, the Swiss System of Deposit protection will be strengthened further, which is why Esisuisse is opposed to the attitude of the IMF."

Higher rate than in the EU

Esisuisse have a by the Federal Council mandated the public order, the spokesman. The Swiss depositor protection system is financed more than sufficient. First of all, the liquidity of the closed institution will be used to secure deposits to pay off. A comparable System exists in no other country. Then, if the funds of the closed Bank are not sufficient, would be used in a second step, the funds of Esisuisse. You should be after the intended revision of the law in the future, 1.6 percent of all insured deposits, the equivalent of about 7 billion Swiss francs. The rate is higher than in the EU.

doubts expressed by the IMF-Economists finally, in relation to the adequacy of the Bank Supervisory authority Finma. She was simply too small and too little well-endowed in comparison to the importance of banks in the country. Problematic is also, that you had to rely on the external auditor for banks. A representative of the Finma replied, with conditions which had been restricted rooms for external accountants already. (Tages-Anzeiger)

Created: 02.04.2019, 10:21 PM

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