A Swiss panel from the government and the central bank is examining options such as capital controls and negative interest rates to curb the franc’s strength, Finance Minister Eveline Widmer-Schlumpf said.
“If the situation deteriorated further in the foreign-exchange markets, we would have the opportunity to take certain accompanying measures,” Widmer-Schlumpf said at a hearing in parliament’s lower house in Bern yesterday. Among the steps being considered are negative interest rates, a levy on transactions and restrictions on the movement of Swiss and foreign currencies. The panel is also looking at restrictions, including a possible ban, on foreigners buying Swiss real estate.
The Swiss franc has appreciated to record levels against the euro over the last year, raising the risk of deflation and threatening exports. That prompted the country’s central bank to impose a limit of 1.20 francs per euro in September and the government to lower its forecast for next year’s economic growth. Basel, Switzerland-based freight forwarder Panalpina Welttransport Holding AG said last month the franc’s strength had a “significant” effect on its results.
‘Don’t Want To’
“I would like to emphasize that we don’t want to implement these measures,” Widmer-Schlumpf said. They “are being examined so that, in case of need, everything has been considered and we can make suggestions.”
The finance minister has made similar statements in the past. On Dec. 7, she said at a hearing in the parliament’s upper house that capital controls and negative interest rates “are issues which are being examined.”
The task force consists of officials from the Swiss finance ministry, the economy ministry and the Swiss National Bank, the finance minister said.
The Swiss franc remains “massively overvalued” and should continue to weaken, Economy Minister Johann Schneider-Ammann said at yesterday’s hearing.
He also called the Swiss central bank’s franc ceiling of 1.20 versus the euro a “necessary” measure.
“The purchasing power parity is at 1.35, 1.40,” Schneider-Ammann added. It would be desirable for the exchange rate to “move into this direction sooner rather than later.”