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IMF Tells Switzerland To End Currency Cap Once Economy Improves

The Swiss National Bank should allow the franc to float freely once economic conditions normalize, the International Monetary Fund (IMF) said Tuesday.

The IMF certified Switzerland's strong economic base, but cautioned that the worsening eurozone crisis is the biggest risk to the economy.

The agency said the introduction of the exchange rate floor by the central bank last year was an appropriate monetary policy response to the sharp economic contraction at that time, and the deflation caused by the franc's appreciation.

The IMF also recommended adoption of measures quickly to reform the pension system to counter financial consequences of demographic developments.

The lender warned that there is a growing risk of a real estate bubble in parts of the Swiss real estate market, given the the persistently low interest rates.

by RTT Staff Writer

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