By Brenna Hughes Neghaiwi
ZURICH (Reuters) – A full V-shaped recovery is unlikely for the Swiss economy, Andrea Maechler, a member of the Executive Board of the Swiss National Bank, told Swiss newspaper Neue Zuercher Zeitung as the central bank concentrates on monetary interventions to keep the Swiss franc under control.
"We are experiencing a stronger and more complete shock than we could have imagined from the start," Maechler told the newspaper in an interview published on Saturday. "A thin and complete V-shaped recovery is unlikely. Social distancing, rising debt, rising unemployment and falling incomes mean the recovery will take longer."
While the SNB maintains its ultra-expansive monetary policy, driven by negative interest rates and interventions in foreign currencies, interventions are still needed to prevent the Swiss franc from increasing in value and therefore, avoid further damage to the Swiss economy, he said. .
Related Downloads:
Despite the pressure to strengthen the Swiss franc and a shock to oil prices, with its impact on inflation, the SNB is not afraid of a deflationary spiral in Switzerland, said Maechler.
"We currently see no risk of inflation," he said.
In March, the SNB doubled its payments to the central and regional authorities of Switzerland to reach 4 billion Swiss francs ($ 4.11 billion) and had to face calls to increase this payment in a context where the & # The economy is expected to face its worst recession in 45 years due to the new epidemic of coronavirus.
The payment of CHF 4 billion was the annual maximum agreed between the SNB and the federal government. Maechler told the Neue Zuercher Zeitung that any additional single payment to finance the emerging costs of COVID-19 would thwart monetary policy.
"We are already making our contribution to overcome the crisis, and not only to intervene in the currency markets," he said.
A state-funded refinancing service for crisis-hit companies, a collaborative effort between the Swiss central bank, government, market surveillance authority and banks, has also helped to ensure Adequate liquidity in the banking system, says Maechler.