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IMF praises Swiss policy during recession

Switzerland’s steps to dampen the economic recession were "adequate" and "appropriate", a review by the International Monetary Fund (IMF) has found.

Claire Waysand, assistant director of the European department of the IMF, praised the Swiss National Bank’s (SNB) moves to increase the money supply and the country’s strong fiscal position.

She said in Bern on Tuesday that the economic downturn had hurt Switzerland less than its neighbours thanks to adequate support measures. The IMF still cautioned against raising interest rates too soon.

“Any exit from expansionary policies should be gradual,” the IMF said in a statement published on the Swiss finance ministry’s website. Inflation risks appear to be weak, and the franc seems to be correctly aligned, despite a real appreciation of 12 per cent since mid-2007, it added.

Uncertainties remain about medium-term growth prospects related to the financial sector. The IMF said a moderate recovery is within sight, with an increase of about 1.5 per cent in GDP projected for 2010-2011.

The group recommends that Switzerland continue to work to stablise its financial system while reinforcing supervision and regulation measures. The independence of external auditors needs to be better guaranteed and officials should clarify the roles of the SNB and Finma, it said.

IMF experts, who do annual reviews of the economic and financial situations of member countries, also addressed the issue of banks that are “too big to fail”. They say Switzerland should work to demand that banks impose tougher capital requirements.

Peter Siegenthaler, director of the Swiss Federal Finance Administration, and Thomas Moser, an alternate member of the SNB board, agreed with the IMF’s findings and recommendations, which will be detailed in a report due out in May. and agencies

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