Inputreferat Bundesrätin Karin Keller-Sutter - St. Gallen Symposium, 2. Mai 2024
I would like to thank the University of St. Gallen for the invitation and the possibility to speak to you today.
First, let me underline that many HSG alumni contribute to the success of Switzerland daily, in the private sector as well as in the public sector. This includes my department.
The fact that we are meeting here today for the fifty-third St. Gallen Symposium shows a long-term commitment to cross-generational dialogue. I have learned that this dialogue follows the vision of "leading with the next generation in mind". Rest assured that this is exactly what I aim for as Finance Minister.
However, this task is not getting any easier.
Over the last four years, we have had to face major external shocks, with the COVID-19 pandemic and the Russian war of aggression in Ukraine.
We are also witnessing a surge in the conflict in the Middle East following the atrocious terror attacks of Hamas against peaceful Israeli citizens.
We see the tensions surrounding Taiwan lingering. And as if all that weren't enough, we are confronted with persisting serious and complex challenges such as those relating to natural resources and climate change. And as I already pointed out three years ago here in St. Gallen, we have to cope with liberal doctrines coming increasingly under pressure.
Such gloomy scenarios stand in sharp contrast to the economic order built after the Second World War based on social market economy and free trade. In particular, they differ from the very optimistic expectations held after the Cold War regarding the final breakthrough of liberal democratic principles based on the rule of law.
This system, which has created tremendous wealth through the international division of labor, fundamentally requires certainty and trust in order to work.
However, the fragmentation of value chains along political lines and the challenges to multilateral fora make us question many assumptions that we perhaps used to take for granted – including the affluence of our society.
Besides the human tragedy of war, these growing tensions have one common consequence: they tend to increase economic cost and decrease efficiency.
Both adversely affect the availability of raw materials, goods and services. The prospect of facing episodes of scarcity even in developed countries – such as those we witnessed during the global economic crisis of the early 1970s – has once again become plausible.
Division of labor and efficiency seem to be concepts far away from human woes. They aren't. They've led to economic prosperity, from which billions of people around the world have benefited.
Less economic prosperity means less wealth, which is of course far from trivial. It may have direct political as well as social consequences, making markets, societies and individual lives less stable. Dealing with such instabilities is a political reality that we need to acknowledge and address.
Switzerland's wealth and quality of life are still very high. They depend largely on the country's openness to the world economy, and de facto on conditions that we cannot determine on our own.
But the good news is that there are aspects that we can address. The Swiss economic success is also based on cultural and political factors such as entrepreneurial spirit and commitment, individual freedom, democratic principles and the rule of law. Both the private and public sector carry responsibility.
For the public sector, sound fiscal and budgetary policies are key – especially when keeping future generations in mind.
Let me emphasize: this should not be misunderstood as a plea for a weak state. Quite the opposite. As a classical liberal, I am an advocate of a strong state. And a sound, sustainable fiscal policy is at the very core of its strength. It ensures the state's responsibility to act and invest in the interests of its citizens and their physical, economic and social security, in both the short and long term.
In these challenging times, even many highly developed economies are severely constrained by their debt, finding themselves in a reactive position without adequate buffers. This is what the Swiss government want to avoid for Switzerland.
The importance of the ability to act in an interconnected world was demonstrated about a year ago. Following a series of bad decisions taken by its management, a Swiss bank of global systemic importance experienced a serious crisis of confidence, which required swift public intervention. A solution was found in the public interest to avoid a financial crisis that would have weighed heavily on the entire Swiss economy and thus Swiss citizens and taxpayers, and that would have rippled outward internationally.
As you know, government action didn't stop there. The failure of Credit Suisse raised many issues, both nationally and internationally. We therefore thoroughly analyzed the existing too-big-to-fail framework and the lessons learned from the crisis, resulting in a broad action plan to fill the gaps we detected.
In an interconnected world, this endeavor cannot stop at the Swiss borders. In order to make the resolution of a global systemically important bank not only theoretically possible but also credible and viable, we will have to work together in order to address and reduce the related risks.
In addition to the work planned at national level, we are therefore also engaging in the relevant international fora – in particular the Financial Stability Board – so that the framework can be strengthened at the global level as well.
This brings me back to multilateralism. We are not naïve. Multilateral institutions and fora are facing major challenges. In times like these, with free trade under pressure through growing protectionism; with governments under pressure through high levels of debts but increasing spending needs; with liberal democracies under pressure through populism, disinformation and authoritarianism promising simple answers to complex questions – we shouldn't content ourselves with blind optimism. But not with fatalism either.
It's my firm belief that multilateralism is not merely idealistic; it is the most effective way of defending the interests of our citizens. Recently, the historian Lorraine Daston said in an interview with "NZZ Geschichte" that there is "no culture without rules". Rules, she said, bring "predictability". And predictability, I might add, brings trust.
Defending and engaging in multilateralism means defending a rules-based order. And therefore, contributing to the preservation and enhancement of certainty and trust.
In the end, the best rules are those that apply to everyone, while fragmentation increases complexity, drives up costs and potentially worsens the effects of scarcity.
Ladies and gentlemen, dear students
We need to lead by example – and we need to lead "with the next generation in mind". Accepting the potential for episodes of scarcity in its various dimensions and letting our policies both domestically and internationally guide by this reality are unavoidable.
This does not necessarily mean that we are facing a future of declining well-being. It means that we have to preserve our resilience. And in order to do so, we not only have to defend a multilateral rules-based order, we also have to do the work at home: not only defending, but cherishing our liberal and democratic values and the rule of law, preserving our institutions and our openness, and contributing to a constructive and solution-oriented political culture, to the sustainable use of our limited resources and to a sound fiscal policy.
This is the basis for our shared wealth and for the prosperity of future generations.
I am looking forward to an insightful discussion.
Letzte Änderung 02.05.2024
