Prepared by: Beibit S., Kuatbekova
G., Murzakarimova P.
Monetary policy of Switzerland
- Switzerland - one of the most important
financial centers in the world.
- Swiss National Bank, which started its activities in
1907, is the only financial institution producing the national currency.
- The main currency - Swiss Franc - one of the most
stable currencies in the world.
- The National Bank is controlled by the federal government
and has a great influence on the economic policy of the confederation.
There are two interconnected
the state system, including
the Swiss National Bank and the banks of the cantons
the system of private banks
of the Swiss bank
- The Bank's activity is defined in Article 99 of the
Constitution of Switzerland:
1. Monetary and currency business
is managed by the Confederation, it alone has the right issue coins
2. The Swiss National Bank as
an independent central bank conducts monetary and currency policy that
serves to the general interest of the country; it is governed by the
participation and under the supervision of the Confederation
3. The Swiss National Bank forms
among its revenues sufficient currency reserves; part of these reserves
is contained in gold.
4. Net profit of the National
Bank of Switzerland for at least two-thirds comes to cantons.
The main functions
of the Bank of Switzerland
- Conducting credit and monetary policy to maintain price stability.
- Implementation of a guaranteed supply of currency
has the privilege of printing banknotes.
- Management of international reserves (which include reserves
of gold, currencies, instruments of international payments).
- Ensuring the stability of the financial system.
- Provision of non-cash payments.
- Publication of statistical reports.
Bank and its monetary and credit policy
- First, the National Bank is holding out for price stability, taking
into account the economic situation. Inflation and deflation - deterrents
for producers and consumers, they undermine economic development, making
the economy weaker and causing harm to it. According to the management
of the central bank, price stability corresponds to the rate of inflation
not above 2%.In the formulation of monetary and credit policy, the Bank
is guided by its own inflation forecasts.
- Secondly, the basis for the development of monetary
policy is the medium-term outlook for inflation.
- Third, it sets
a target range of operating rates on three-month rate of LIBOR (London
Interbank Offered Rate).
- Defined monetary aggregates are M1, M2, and M3.
- Money issuers are banks, post offices, and Swiss National Bank for currency, coins, and deposits.
- Note: Current deposits and sight deposits at the
SNB are included in each monetary aggregate.
- Money holders are private non-depository residents.
- Time deposits with any term of maturity are included in non-M2 component
- Foreign currency denominated deposits are excluded from each aggregates.
- MMMFs and RPs are excluded from all aggregates.
Definition of the Monetary Aggregates in Switzerland
Sum of the following three components.
In Circulation, including:
* Notes and coins
* Current accounts at the Swiss
National Bank (SNB)
* Sight deposit accounts of trade and
industry at the SNB
Notes and coins in circulation
minus those at banks and post offices
(2) Sight Deposits at Banks plus Postal Account Balances
Excluding postal account balances
of banks and the Federal government.
(3) Transaction Accounts
Deposits in the form of savings
accounts and investments for payment purposes
M1 plus the following component.
Liabilities vis-à-vis clients
in savings and investment form, excluding transaction accounts and vested
pension benefit and pension fund accounts
M2 plus the following component.
Capital of Switzerland
- Switzerland very widely places own capital in the form of investments
worldwide. The Swiss investments abroad have a characteristic feature:
they go almost only to industrialized countries.
- One third of all private capital investments in the world passes through
the Swiss banks that essentially fills up thanks to taxes the budget
of the country and allows to hold other taxes at rather low level.
Till the end of
2012 in Switzerland surplus of the budget in 1,5 billion SFR is expected
- On August 15, 2012, the government of the Swiss
Confederation declared that, despite considerable reduction of the income
and only insignificant reduction of expenses, till the end of the current
year the budgetary surplus in 1,5 billion SFR is expected. Similar data
are received as a result of extrapolation of indicators of national
economy in 7 months. Earlier it was supposed that the budget for 2012
will be executed with deficiency about 2,3 billion SFR.