Switzerland remains on US Treasury’s ‘monitoring list’

Bastion of monetary policy: the Swiss National Bank in Bern. Keystone / Peter Klaunzer

Bern is still under close observation by financial authorities in Washington, despite no longer being on the US list of designated currency manipulators.

The Treasury said on Friday that in 2022 Switzerland had exceeded only one of three criteria necessary to warrant “enhanced analysis” of its foreign exchange practices.

Nevertheless, Bern remains on a “monitoring list”, and Washington plans to “continue to conduct an in-depth analysis of Switzerland until it does not meet all three criteria under the 2015 [Trade Facilitation and Trade Enforcement] Act for at least two consecutive reports”.

To earn the label of currency manipulator and to warrant enhanced analysis, a country must have a bilateral trade surplus of at least $15 billion (CHF13.4 billion) with the US, foreign currency interventions higher than 2% of GDP, and a material current account surplus exceeding 3% of GDP.

+ From 2020: is Switzerland a currency manipulator?

And for the purposes of the report, the Treasury is only concerned with deliberate weakening of currencies for a trade advantage – not in order to stem inflation.

In the latest reportExternal link, Switzerland – with a global current account surplus of 10.1% of GDP – largely overshot one of the three factors, and as such the Treasury said it would continue “enhanced bilateral engagement with Switzerland to discuss the Swiss authorities’ policy options to address the underlying causes of its external imbalances”.

Watch list

In late 2020, Washington branded Switzerland a currency manipulator, accusing it of  intervening in foreign exchange markets to prevent effective balance of payment adjustments. In April 2021 it rolled back on this, while maintaining a procedure of enhanced engagement to address Swiss “currency undervaluation and external imbalances”.

The Treasury’s current monitoring list also includes China, Taiwan, South Korea, Germany, Malaysia, and Singapore.