OECD warns Central bank to restrain surging currency

The Paris-based Organisation for Economic Cooperation and Development (OECD) has warned the Swiss central bank to guard against allowing the franc to rise too much against the euro.

In its annual report, published on Thursday, the OECD said Switzerland’s present monetary policy could lead to the franc gaining too much ground against the single European currency.

“The present monetary policy stance being broadly appropriate to produce balanced growth, the Swiss National Bank should guard against triggering too sharp an appreciation against the euro.”

The report was completed before the central bank’s decision last Friday to leave interest rates unchanged in spite of a rise in inflation.

The OECD also said it was concerned about Swiss legislation to prevent tax evasion. “Since the scope of the Swiss withholding tax has been up to now limited to Swiss-sourced income, there is still a concern on how to effectively discourage such tax evasion,” the report said.

The OECD restated its predictions for Swiss GDP, saying it expected growth of 3.3 per cent in 2000, slipping to 2.4 per cent in 2001 and to 2.0 per cent in 2002.

Inflation is expected to reach 1.7 per cent in 2000, 1.8 per cent in 2001, before dropping back to 1.7 per cent in 2002.

swissinfo with agencies