In its latest forecasts for 2016, the IMF is reckoning on global economic growth of approximately 3%. It believes that the increase in financial market volatility observed recently could be a reflection of growing uncertainty concerning the global economic situation. The interest rate environment caused by the still expansive monetary policy pursued worldwide is leaving little room for manoeuvre. A series of risks could further put a damper on the growth prospects: China's transition to sustainable growth, the impact of low commodity prices as well as the still pending recovery in Europe's banking sector. Finally, the geopolitical risks have also increased and according to the IMF include terrorism, flows of refugees and a possible Brexit. Against this backdrop, the IMF recommends a concerted approach at the monetary, budgetary and structural policy level.
The finance ministers and central bank governors will additionally discuss the issue of the size and structure of the global financial safety net. It will primarily be a case of examining the appropriateness of the IMF's instruments and resources for preventing and responding to future crises.
Switzerland believes that structural measures aimed at boosting financial market confidence should be given priority. Furthermore, it is necessary to continue paying attention to systematic implementation of the key reforms concerning financial market regulation, especially Basel III and the new standard regarding the loss absorbency of global systemically important banks. International efforts should remain focused on the relevant risks and not lead to over-regulation.
In Switzerland's opinion, there is no fundamental need to modify the global financial safety net at present. The system's resilience does not depend solely on the amount of the resources. Ultimately, the soundness of the economic and fiscal policies pursued nationally is decisive. Finally, the framework for dealing with sovereign debt restructuring should also be discussed.
The Development Committee of the World Bank Group will focus on its future role and its ability to help reduce poverty and provide beneficiary countries with support for tackling global challenges such as climate change, spiralling inequality and migration. Switzerland will encourage the World Bank to gear its activities towards its core areas of expertise and focus on its strategic priorities. Regarding the challenges posed by forced displacement, the World Bank has to concentrate on increasing the resilience of countries of origin and host countries and communities, and cooperate closely with other partners in the process. Moreover, it should step up its crisis prevention efforts and help eliminate structural obstacles to inclusive economic growth. Continued strong commitment of the World Bank in middle-income counties, where the majority of the poor live, remains essential. These countries are a growth driver for the world economy and play a decisive role regarding the provision of public goods. Within the framework of the ongoing revision of voting rights, it is important to keep an eye on the financial and institutional consequences for the entire World Bank Group.
Address for enquiries:
Beat Werder, Head of Communications, State Secretariat for International Financial Matters SIF
Tel. +41 58 469 79 47, beat.werder@sif.admin.ch
Werner Gruber, Head, a.i., Multilateral Cooperation, State Secretariat for Economic Affairs SECO
Tel. + 41 58 464 08 19, werner.gruber@seco.admin.ch
Nicole Ruder, Head of the Global Institutions Division, Swiss Agency for Development and Cooperation SDC
Tel. +41 58 462 00 77, nicole.ruder@eda.admin.ch
Publisher:
The Federal Council
Federal Department of Finance
Federal Department of Economic Affairs, Education and Research
Federal Department of Foreign Affairs
