IMF evaluates Swiss financial sector

Switzerland is one of the first industrialised economies to put itself forward for scrutiny swissinfo.ch

The International Monetary Fund (IMF) has begun examining Switzerland's commercial sector in a bid to evaluate the country's financial well-being.

The investigation is part of a wider project by the IMF and World Bank called the Financial Sector Assessment Programme, which was founded in the wake of the ’90s currency crisis.

To safeguard against future financial crises, the IMF and other financial institutions decided to look at the micro, or domestic, economic structures of its member countries as well as the bigger international picture.

The programme is, however, voluntary and Switzerland is one of the first industrialised economies to put itself forward for scrutiny, but the Swiss government believes the country will benefit from the IMF’s findings.

“In Switzerland, we have an overwhelming interest in global financial stability,” René Weber of the Swiss Finance Ministry told swissinfo. “Our financial sector contributes significantly to the creation of wealth and prosperity,” Weber said, so Switzerland has reason to contribute information that could help other countries, and international organisations.

Valuable feedback

But while other IMF member countries will benefit from Switzerland’s financial expertise, the Swiss, in turn, will also receive valuable feedback from the IMF.

The assessment will indicate ways in which Switzerland can improve its crisis management and prevention, says Weber.

This could prove indispensable when it comes to commercial challenges such as making the economy more recession-proof.

Preparatory IMF visit

The evaluation started in June when IMF representatives paid a preparatory visit to the country to agree on how and what they should investigate.

As Weber points out, Switzerland as an industrialised country has different strengths and weaknesses than a developing country.

For example, the main concern in developing economies may well be how technical assistance can help regulate financial institutions, whereas in industrialised countries it is more a matter of how certain international guidelines are followed.

After the initial visit, Switzerland was sent a number of questionnaires relating to international standards in the financial sector, structural developments and the industry’s regulatory framework.

Once completed, the questionnaires formed the basis of the second part of the IMF probe by highlighting the financial system’s potential vulnerabilities.

The third part consists of another IMF visit, when IMF representatives along with other international financial experts will talk to the Swiss national banks and members of the private sector such as insurers and pension funds.

by Sally Mules and Vanessa Mock