Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

SWITZERLAND

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of March 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: May 29, 1992.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On February 24, 2006, Switzerland notified the IMF of financial sanctions that have been imposed against certain countries, individuals, and entities, in accordance with relevant UN Security Council resolutions and EU regulations. In addition, on March 13, 2007, the authorities notified the IMF of additional financial sanctions that have been imposed against certain countries, individuals, and entities, in accordance with relevant UN Security Council resolutions and EU regulations.



In accordance with UN Security Council resolutions, restrictions have been imposed with respect to (1) specific individuals and entities that constitute a threat to international peace and security in the Democratic Republic of the Congo; (2) specific individuals posing a threat to international peace and security in Côte d’Ivoire; (3) specific individuals and entities involved in the nuclear and/or ballistic missile programs of the Islamic Republic of Iran; (4) specific individuals and entities associated with the former government of Iraq; (5) specific individuals and entities engaged in the Democratic People’s Republic of Korea’s weapons of mass destruction (WMD)–related programs (effective October 25, 2006); (6) specific individuals and entities suspected of involvement in the bombing that killed former Lebanese Prime Minister Rafik Hariri; (7) financing of and financial services related to the provision of arms and related materiel to Lebanon (effective November 1, 2006); (8) specific individuals and entities associated with the former governments of Liberia; (9) specific individuals who impede the peace process in Sudan; and (10) specific individuals and entities associated with Osama bin Laden, Al-Qaida, and the Taliban.



In accordance with EU regulations, restrictions have been imposed with respect to (1) specific individuals and entities associated with the governments of Belarus and Myanmar (effective June 28, 2006); (2) financing of and financial services related to military activities in Uzbekistan (effective January 18, 2006); (3) the previous government of the former Federal Republic of Yugoslavia; and (4) specific individuals associated with the government of Zimbabwe. Effective February 14, 2007, restrictions were imposed against the Islamic Republic of Iran.
References to legal instruments and hyperlinksFederal Act on the Implementation of International Sanctions 946.231; Ordinance on Economic Measures against Iraq 946.206; Ordinance on the Confiscation of Frozen Assets in Iraq and Transfer to the Development Fund for Iraq 946.206.1; Ordinance on Measures against Individuals and Entities Related to Osama bin Laden, Al-Qaida, and the Taliban 946.203; Ordinance on Measures against Liberia 946.231.16; Ordinance on Measures against Sudan 946.231.18; Ordinance on Measures against the Democratic Republic of the Congo 946.231.12; Ordinance on Measures against Côte d’Ivoire 946.231.13; Ordinance on Measures against Specific Individuals Related to the Attack on Rafik Hariri 946.231.10; Ordinance on Measures against the Democratic People’s Republic of Korea 946.231.127.6; Ordinance on Measures against Lebanon 946.231.148.9; Ordinance on Measures against the Islamic Republic of Iran 946.231.143.6; Ordinance on Measures against Individuals Related to the Former Government of Yugoslavia 946.207; Ordinance on Measures against Myanmar 946.231.157.5; Ordinance on Measures against Zimbabwe 946.209.2; Ordinance on Measures against Uzbekistan 946.231.17; Ordinance on Measures against Belarus 946.231.116.9.
Exchange Arrangement
CurrencyThe currency of Switzerland is the Swiss franc.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the Swiss franc is determined by supply and demand in the foreign exchange market. However, the Swiss National Bank reserves the right to intervene in the foreign exchange market. All settlements are made at free market rates.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo officially fixed premiums and discount rates apply to forward exchange contracts, all of which are negotiated at free market rates.
References to legal instruments and hyperlinksNational Bank Act 951.11.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On external tradeImport and export licenses, which are issued freely, are required for commercial imports and exports of certain articles containing gold. Licenses are not required for imports or exports of gold coins or bullion.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksFederal Law on Precious Metals Control 941.31; Precious Metals Control Ordinance 941.311.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadEffective September 1, 2006, deposit accounts held abroad are not accepted to cover the technical reserves of an insurance company, unless the deposit account is held in Luxembourg, Belgium, or Liechtenstein. Previously, controls applied to deposits in accounts held abroad if these assets formed more that 30% of the cover of the technical reserves of an insurance company.



Controls apply to deposits of funds with nonresident financial institutions if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund.
Accounts in domestic currency held abroadControls apply to deposits of funds with nonresident financial institutions if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, the previous 30% limit on deposits abroad by insurance companies was eliminated.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksOrdinance on Occupational Benefit Plans Concerning Old Age, Survivors, and Disability 831.441.1; Investment Directives of the Federal Office of Private Insurance on the Tied Assets of Private Insurance Companies of June 12, 2006.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Open general licensesLicenses are required mostly for agricultural products.
Licenses with quotasLicenses with quotas are required for specific agricultural products.
Other nontariff measuresImport controls apply for weapons and war material, and for sanitary or phytosanitary reasons. Imports of rough diamonds are permitted only under the Kimberley Process Certification Scheme.
Import taxes and/or tariffsIn general, customs duties are levied based on the weight of goods instead of their value. On industrial goods, import tariffs are generally very low (average 0.25% ad valorem). On agricultural goods, they average about 7.7% ad valorem. The tariff rates on agricultural goods that are imported above quota may range up to several hundred percent (in ad valorem terms). In the framework of the General Agreement on Tariffs and Trade—Uruguay Round, all quantitative restrictions and measures having equivalent effects concerning agricultural products have been transformed into tariffs. To maintain market access opportunities prevailing in 1986–88, 28 tariff rate quotas were created for specific agricultural and livestock goods (fruits, vegetables, meats, wines, etc.).
State import monopolyState monopolies apply to imports of alcohol of 80 proof and above and of salt, although private sector imports may be effected with prior authorization. Some cantons have a monopoly on imports of salt.
References to legal instruments and hyperlinksWeapons Act 514.54; Federal Law on War Material 514.51; Federal Act on the National Economic Supply 531; Customs Tariff Act 632.10; Federal Law on Alcohol 680; Federal Law on Agriculture 910.1; Ordinance on the Import of Agricultural Products 916.01; Ordinance on Plant Protection 916.20; Ordinance on the Production and Marketing of Feed 916.307; Law on Epizootics 916.401; Ordinance on the Import, Transit, and Export of Animals and Animal Products 916.443.11; Ordinance on the Labeling of Agricultural Products 916.51; Federal Law on Food and Objects of Daily Use 817.0; Ordinance on Food 817.02 and related Ordinance 817.41; Law on the Protection of Animals 455; Ordinance on the Conservation of Species 232.161; Ordinance of the Federal Veterinary Office Establishing Temporary Border Measures to Combat Avian Influenza 916.443.40; Ordinance on the International Trade in Diamonds 946.231.11; Constitutions of the Cantons 131.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesA system of general and individual licenses applies to controlled exports.
Without quotasExports of weapons, war material, and dual-use goods that may be used for the production of conventional weapons and WMD are controlled and require a license. Exports of rough diamonds are permitted only under the Kimberley Process Certification Scheme.
Export taxesNo.
References to legal instruments and hyperlinksWeapons Act 514.54; Federal Law on War Material 514.51; Goods Control Act 946.202; Ordinance on the International Trade in Diamonds 946.231.11.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase abroad by residentsControls apply to the purchase of shares or other securities of a participating nature issued by nonresidents if these assets are to form more than 25% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, if an insurance company covers its technical reserves with shares (issued by either residents or nonresidents), there is a limit of 30% (previously, 25%) and the shares must be listed on a stock exchange within a liquid market.
Bonds or other debt securities
Purchase abroad by residentsControls apply to the purchase of debt instruments issued by nonresidents if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, the previous 30% limit on insurance companies’ investments in debt instruments issued by nonresidents was eliminated.
On money market instruments
Purchase abroad by residentsControls apply to the purchase of debt instruments issued by nonresidents if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, money market instruments held abroad are accepted only to cover the technical reserves of an insurance company if they are vested in securities. Previously, debt instruments were not allowed to exceed 30% of the cover of the technical reserves of an insurance company.
On collective investment securities
Sale or issue locally by nonresidentsControls apply to the issue of foreign collective investment securities that are subject to a stamp duty. Representatives or distributors of foreign investment funds need a license from the Swiss Federal Banking Commission.
Purchase abroad by residentsControls apply to the purchase of securities issued by nonresidents if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, if an insurance company covers its technical reserves with collective investment securities, the securities must be traded in a liquid market and be supervised under a qualified regulatory regime. Previously, a 30% limit applied to the purchase of collective investment securities by insurance companies.
Controls on derivatives and other instruments
Purchase abroad by residentsControls apply to the purchase of or swap operations in instruments and claims issued by or contracted with nonresidents if these assets are to form more than 20% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, the use of derivatives for hedging the tied assets or the technical provisions of an insurance company is permitted. There are several restrictions on the use of derivatives for other purposes for insurance companies. Previously, a 20% limit applied to the purchase of or swap operation in instruments issued by or contracted with nonresidents by insurance companies.
Controls on credit operations
Financial credits
By residents to nonresidentsControls apply to credits and loans granted to nonresidents if these assets are to form more than 20% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, credits and loans granted to nonresidents are accepted to cover the technical reserves of an insurance company only if they are vested in securities. Previously, a 20% limit applied to credits and loans granted to nonresidents by insurance companies.
Controls on direct investment
Inward direct investmentControls apply to the (1) acquisition of real estate, which is subject to authorization by the relevant cantonal authority when the acquirer does not use the property to operate a permanent establishment; (2) establishment of enterprises for the distribution and exhibition of films; (3) registration of a ship in Switzerland serving two points on the Rhine and of a vessel intended to offer commercial maritime transport services; (4) registration of an aircraft in Switzerland and investment in an airline under Swiss control, unless other provisions of international agreements to which Switzerland is a party apply; (5) investment in the sectors of hydroelectricity, oil and gas pipelines, and nuclear energy; and (6) investment in a broadcasting company, subject to reciprocity.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsControls apply to the acquisition of real estate located outside Switzerland if these assets are to form more than 5% of the assets representative of the liabilities of a private pension fund. Effective September 1, 2006, real estate located outside Switzerland is not permitted to cover the technical reserves of an insurance company. Previously, a 5% limit applied to the acquisition of real estate outside Switzerland by an insurance company.
Purchase locally by nonresidentsPurchases by foreigners who are not permanent residents in Switzerland and by enterprises with headquarters abroad or under foreign control are subject to authorization. However, no authorization is required for the acquisition of premises for professional use and business activities and of principal residences for the purpose of personal housing needs by foreigners who are domiciled in Switzerland. For the acquisition of holiday residences and secondary residences for the purpose of personal housing needs, authorization is granted on verification of the purpose. Purely financial investments and trade in apartments are prohibited (with some exceptions).
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksOrdinance on Occupational Benefit Plans Concerning Old Age, Survivors, and Disability 831.441.1; Insurance Supervision Law 961.01; Supervision Ordinance 961.011; Investment Directives of the Federal Office of Private Insurance on the Tied Assets of Private Insurance Companies of June 12, 2006; Federal Act on Collective Investment Schemes 951.31; Ordinance of the Federal Council on Collective Investment Schemes 951.311; Ordinance of the Swiss Federal Banking Commission on Collective Investment Schemes 951.312; Federal Act on Radio and Television Broadcasting 784.40; Federal Act on the Film Industry 443.1; Federal Act on the Acquisition of Immovable Property by Persons Abroad 211.412.41; Federal Act on Swiss-Flag Maritime Transport 747.30; Federal Act on the Shipping Register 747.11; Revised Convention on Navigation of the Rhine (Mannheim Act) 0.747.224.101; Federal Aviation Act 748.0; Aviation Ordinance 748.01 and Chicago Convention 0.748.0; Concordat on Oil Prospecting and Exploitation 931.1; Federal Act on the Uses of Hydroelectric Power 721.80; Federal Act on Pipelines for Liquid or Gaseous Fuels 746.1; Federal Act on Nuclear Energy 732.1; Ordinance of the Federal Council on Nuclear Energy 732.11.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Insurance companiesEffective January 1, 2006, the new Insurance Supervision Law and the new Supervision Ordinance went into effect. Effective September 1, 2006, the overall limit on investments to cover the technical reserves of an insurance company is 20% for foreign currencies. This limit takes into consideration the effects of hedging. Previously, the limit was 30%. Effective September 1, 2006, the new Investment Directives of the Federal Office of Private Insurance on the Tied Assets of Private Insurance Companies of June 12, 2006, went into effect.
Limits (max.) on securities issued by nonresidentsEffective September 1, 2006, if an insurance company covers its technical reserves with shares (issued by either residents or nonresidents), there is a limit of 30% and the shares must be listed on a stock exchange within a liquid market. If an insurance company covers its technical reserves with collective investment securities, the securities must be traded in a liquid market and be supervised under a qualified regulatory regime. Previously, the limits were 25% and 30% respectively.
Limits (max.) on investment portfolio held abroadEffective September 1, 2006, the technical reserves of an insurance company may not be covered by (1) deposit accounts held abroad, unless the deposit account is held in Luxembourg, Belgium, or Liechtenstein; (2) real estate located outside Switzerland; (3) money market instruments held abroad, unless they are invested in securities; or (4) credits and loans granted to nonresidents, unless they are invested in securities. The use of derivatives for hedging the tied assets or the technical provisions of an insurance company is permitted. There are several restrictions on the use of derivatives for other purposes for insurance companies. Previously, deposit accounts held abroad and money market instruments issued by nonresidents were accepted to cover 30% of the technical reserves of an insurance company. Credits and loans to nonresidents and the purchase of or swap operation in instruments and claims issued by or contracted with nonresidents were allowed up to 20% of the technical reserves. The acquisition of real estate located abroad was allowed up to 5% of the technical reserves.
Pension funds
Limits (max.) on securities issued by nonresidentsThe overall limit on investments in foreign currencies by pension funds is 30%, with limits for foreign equities, bonds, and real estate of 25%, 20%, and 5%, respectively, of the total portfolio. These provisions are not binding with respect to pension funds that have prudential portfolio management practices.
Limits (max.) on investment portfolio held abroadControls apply to (1) the deposit of funds with nonresident financial institutions if these assets are to form more than 30% of the assets representative of the liabilities of a private pension fund; (2) credits and loans granted to nonresidents if these assets are to form more than 20% of the assets representative of the liabilities of a private pension fund; (3) the purchase of or swap operations in instruments and claims issued by or contracted with nonresidents if these assets are to form more than 20% of the assets representative of the liabilities of a private pension fund; and (4) the acquisition of real estate located outside Switzerland if these assets are to form more than 5% of the assets representative of the liabilities of a private pension fund.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
References to legal instruments and hyperlinksOrdinance on Occupational Benefit Plans Concerning Old Age, Survivors, and Disability 831.441.1; Insurance Supervision Law 961.01; Supervision Ordinance 961.011; Investment Directives of the Federal Office of Private Insurance on the Tied Assets of Private Insurance Companies of June 12, 2006.
In the references above, the collection code indicated after a piece of legislation refers to the official collection of Swiss federal legislation. The text of Swiss federal laws and ordinances is available in German, French, and Italian in the official collection of legislation available at www.admin.ch/ch/d/sr/sr.html (German); www.admin.ch/ch/f/rs/rs.html (French); and www.admin.ch/ch/i/rs/rs.html (Italian). Entering the collection code will direct you to the web page containing the specific legislation.
Changes during 2006
Exchange measuresJanuary 18. Exchange measures were introduced with respect to Uzbekistan.



February 24. Switzerland informed the IMF of financial sanctions imposed against certain countries, individuals, and entities, in accordance with relevant UN Security Council resolutions and EU regulations.



June 28. Exchange measures were introduced with respect to Belarus and Myanmar.



October 25. Exchange measures were introduced with respect to the Democratic People’s Republic of Korea.



November 1. Exchange measures were introduced with respect to Lebanon.
Resident accountsSeptember 1. Deposit accounts held abroad are not accepted as cover for technical reserves of insurance companies unless held in Luxembourg, Belgium, or Liechtenstein.



September 1. The previous 30% limit on deposits abroad by insurance companies was eliminated.
Capital transactions
Controls on capital and money market instrumentsSeptember 1. The previous 30% limit on insurance companies’ investment in debt securities or collective investment securities issued by nonresidents was eliminated and the shares were required to be listed on a stock exchange within a liquid market.



September 1. Collective investment securities covering the technical reserves of an insurance company must be traded in a liquid market and be supervised by a qualified regulatory regime.



September 1. Shares are not allowed to cover more than 30% of the technical reserves of an insurance company. Money market instruments are accepted to cover the technical reserves of an insurance company only if they are invested in securities.
Controls on derivatives and other instrumentsSeptember 1. Derivatives are allowed to be used by insurance companies for hedging tied assets or technical reserves. For other purposes, several restrictions apply.
Controls on credit operationsSeptember 1. Credits and loans to nonresidents are accepted to cover the technical reserves of an insurance company, only if they are vested in securities.
Controls on real estate transactionsSeptember 1. Real estate located outside Switzerland is not accepted to cover the technical reserves of an insurance company.
Provisions specific to the financial sector
Provisions specific to institutional investorsJanuary 1. The new Insurance Supervision Law went into effect.



January 1. The new Supervision Ordinance went into effect.



September 1. The new Investment Directives of the Federal Office of Private Insurance on the Tied Assets of Private Insurance Companies of June 12, 2006, went into effect.



September 1. The technical reserves of an insurance company are allowed to be covered by shares up to 30% of the reserves, if the shares are listed on a stock exchange with a liquid market, and by collective investment securities if the securities are traded in a liquid market and are supervised under a qualified regulatory regime.



September 1. The technical reserves of an insurance company may not be covered by (1) deposit accounts held abroad, unless the deposit account is held in Luxembourg, Belgium, or Liechtenstein; (2) real estate located outside Switzerland; (3) money market instruments held abroad, unless they are invested in securities; or (4) credits and loans granted to nonresidents, unless they are secured by securities. The use of derivatives for hedging the tied assets or the technical provisions of an insurance company is permitted. There are several restrictions on the use of derivatives for other purposes for insurance companies.
Changes during 2007
Exchange measuresFebruary 14. Exchange measures were introduced with respect to the Islamic Republic of Iran.



March 13. The authorities informed the IMF of financial sanctions imposed against certain countries, individuals, and entities, in accordance with relevant UN Security Council resolutions and EU regulations.

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