Federal Department of Finance FDF
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Federal Council adopts dispatch on framework credit for continuing international monetary aid
Bern, 04.07.2012 - During its meeting today, the Federal Council adopted the dispatch on a CHF 15 billion framework credit for continuing international monetary aid. The Confederation can thus guarantee a Swiss National Bank (SNB) credit line of up to USD 10 billion for the International Monetary Fund (IMF) to cover exchange rate fluctuations and possible payment defaults. This credit line is part of international concerted action to avoid destabilising the international monetary and financial system as a result of the escalation of the crisis in the euro zone. In addition, reserves will be created for any further action. This remains subject to approval by parliament.
The sovereign debt crisis in the euro zone has deteriorated to such an extent that there is a risk of global contamination and the stability of the international monetary and financial system is in grave danger. An extraordinary temporary increase in IMF resources was decided upon during the IMF Spring Meetings in April 2012 in order to combat the crisis effectively and to prevent contamination of this nature. Switzerland pledged a contribution of USD 10 billion to the now total amount of USD 456 billion, subject to approval by parliament.
This pledge was made after the conditions imposed by Switzerland were met. Firstly, these additional resources are to go to the general IMF account for stabilising the financial and monetary system and not to a special fund for euro countries. Secondly, the IMF is not to be the most important lender in any future programmes for eurozone countries; it is merely to supplement the euro countries. Thirdly, the IMF will access these additional funds only if its ordinary resources and resources from the New Arrangements to Borrow (NAB) are insufficient for lending. Finally, the burden of concerted action is to be shared appropriately by relevant members of the international community.
It is planned for the SNB to open a temporary credit line for the IMF. The SNB funds are made available solely to the IMF, and not to the individual member countries. Accordingly, the risk of default is deemed to be low. Market-rate interest will be paid on funds actually utilised.
On the one hand, the granting of a CHF 15 billion framework credit for a period of five years serves to cover exchange rate fluctuations and any payment defaults associated with the planned SNB credit line of USD 10 billion. On the other hand, appropriate reserves will be created for any further measures within the scope of international monetary aid.
Promoting the stabilisation of international financial markets is of great importance for Switzerland, as it is a highly export-oriented country. It would be severely affected by a destabilisation of the international financial and monetary system.Publisher:
- The Federal Council
- Internet: http://www.admin.ch/br/index.html?lang=en
- Federal Department of Finance
- Internet: http://www.efd.admin.ch
