US crisis casts shadow over economic meetings

Swiss Finance Minister Eveline-Widmer Schlumpf, pictured at an IMF meeting, found her time in Washington fruitful Keystone

The political stalemate in the United States over the federal government’s finances has been a hot topic - also for the Swiss - at the meetings of the International Monetary Fund and the World Bank.

The Swiss finance and economic ministers, as well as the Swiss National Bank (SNB) chairman, have been in Washington for the annual joint autumn gatherings of the two institutions, which have now wrapped up. The main topic was global economic development.

The president of the World Bank, Jim Yong Kim, has warned that the United States is just “days away from a very dangerous moment” because of the government’s borrowing crisis.

He urged US policymakers to reach a deal to raise the government’s debt ceiling before the October 17 deadline. Talks in Congress again stalled on Saturday evening. The US government has been in partial shutdown since Congress missed a October 1 deadline to pass a budget.

Speaking to reporters on Saturday evening, US time, after two days of IMF/World Bank meetings, Swiss Economics Minister Johann Schneider-Ammann said that if no decision was reached on Thursday, the effects would quickly be felt on the European markets. Investments would not take place and there was a risk of stock exchange trading collapsing.

“The consequences would be felt overnight,” he said in quotes reported on the Swiss news agency.

At the press conference, Schneider-Ammann also welcomed proposals for the reform of the World Bank, which includes savings of $400 million (CHF365 million) a year, saying the lending institution must become more efficient.

G20 meeting

Before the weekend meetings, Finance Minister Eveline Widmer-Schlumpf took part in the meeting of the G20 finance ministers and central bank governors on October 10-11, along with SNB chairman Thomas Jordan.

According to the minister, it been a good year because several difference topics could be discussed concretely and useful exchanges made with other finance ministers, the finance ministry said on Sunday.

Switzerland had contributed to topics such as reform of the international financial architecture, automatic information exchange and the regulation of financial markets, it added.