Monetary policy of (Switzerland):
Introduction
The main primary objective of the the Switzerland's monetary policy is mainly focused on price stability.
Monetary base is the main target of the Switzerland , which is mainly composed of bank notes in current circulation and in giro deposits (demand deposits held with the SNB is with commercial banks).
Giro deposit is the primary target as of now and they also follow SNB ( Swiss national bank ) monetary policy statergy which consist of three main elements price stability.
A medium term inflation forecast and sub policy rate. These three are the thing which mainly set the monetary policy in the way Swiss franc money market rate closes to SNB(Swiss national bank)policy rate.
Swiss bank do their monetary policy
Assessment in the specific months like in March, June ,September and in December. Each assessment results are in an interest rate decision and medium-term conditional inflation forecast.
Due to this COVID-19 SNB(Swiss national bank) chairman MR.Thomas Jordan said that the fiscal policy and and the monetary policy to help the Switzerland economy with contraction trigged due to coronavirus.
They also stated that they have provided the financial system with enough liquidity to ensure that the credit flows so the economy does not dry up and economy can survive in this situation.Some of the new changes to the monetary policy are increase in threshold factor from 25 to 30 to reduce the burden of negative interest on bank.
They are expecting that GDP is likely to be negative for the year.The return to the normal part for the second half of the year will be reflected in the next year and there will be positive growth by the year 2021.
Finance and its crisis in Switzerland :
Overall the whole world economy has got hit by this coronavirus.The Swiss stock market has been hit very badly due to this coronavirus pandemic.
This has affected finance sectors and it has taken a big dip and got hit drastically in the last few days .
It is under a high pressure.This has become a stress test for all the banks on how to manage the situation and the future scenarios.
The Swiss government has taken pretty good measures and opened the 32 billion package as the new measure to cushion the economy,This measure is mainly taken to help the small business and companies to overcome this bad and sudden recession.
They have also announced new spending plans and patterns and also 10 billion is in emergency aid .The federal council is also setting aside 20 billion to guarantee bank loan for cash strapped companies.like other economies in the the world,Switzerland is pumping out money into its crisis hit economy.
Data and analysis
The government has signed off on a 20 billion Swiss franc emergency scheme under which the companies can get their state backed up ,they are also providing a no interest loans of up to 500,000 Swiss francs via their banks to all companies which all got hit and come under the category .
They also said that 20 billion is not enough for this recession and will be very tight of funds . In about two days of this announcement which was was made by the government ,there were 30,000 loan applications submitted and already 4 billion Swiss franc was given to all the companies which got processed through the loan application.
Stats
If they don’t take some action against this crisis there will be lot of unemployment involved. Switzerland average unemployment rate was 2.82 percent in 2019 and it has increased from 2.54 percent in 2018 .They also stated that the loan which they are giving is not a come loss cover and is to paid back as soon as you get the money.
Switzerland’s COVID-19 support package consists mainly of wage subsidies for furloughed workers .e the workers who got very worse and CHF 20 billion in guarantees for emergency loans.
Banks have already handed out more than half of that to roughly 54,000 companies as per the new data .
There is high Demand for the help to cover the salaries of the people who got hit is overwhelming with around 86,000 companies which are seeking benefits for around 1 million employees or more, or about 20 percent of the whole workforce of Switzerland.
Conclusion
The Credit Suisse estimates that the cost so far for the federal measures to safeguard the earnings of the people alone comes somewhere around CHF 4.6 billion for every month the crisis drags on from there till the pandemic is over.
However, the credit sues said that they don’t need to worry a lot because they are left with some old surplus which was being saved by them .Switzerland is already looking to double up its holdings on short-term debt and to step up the sale of the bond to cushion the economic consequences which was caused due to the pandemic caused currently .
China shows that we can stop coronavirus through containment there are many way in fact but it will take a significant amount of economic cost .Globally, the coronavirus shock is severe and is even compared to the Great Financial Crisis (depression) which took place in 2008.
The government has given 32 billion as a package to help the support of the economy.This was added after 10 billion which was announce earlier.
This money is mainly to help companies to survive this recession which is taking place currently due to coronavirus.TO calculate the current Scenario all the economist compare the recession with the previous recession which took place in the economy. But all theses recession is based on three scenarios mainly demand, supply and financial case of the economy but this was caused by a virus and it was a sudden thing which was caused .
This money is also applied for the self employed person because their turnover would have fallen drastically due to this coronavirus.