Switzerland: Financial Sector Stability Assessment; imf country Report 14/143; April 16, 2014

46. Further tightening and additional tools to address potential imbalances in the 
housing and mortgage markets are needed. Demand has been driving the increase in real estate 
lending and residential house prices. Thus macroprudential measures focused on tackling demand 
could complement supply-focused measures. Recent measures seem to have had insufficient 
effect. House price increases have decelerated somewhat, but mortgage lending growth continues 
and quantitative lending standards show little improvement. Existing measures, partly based on 
self-regulation, must be fully enforced to materially change lending standards (including by 
strengthened guidance to auditors and enhanced own onsite inspections), and further tightening 
seems warranted. Absent clear effects the authorities should issue regulations targeting the 
demand side, for example LTV and DTI limits. Targeting affordability is especially important; the 
financial status of households should be monitored closely, likely facilitated by increased data 
collection. Mortgages for commercial purposes deserve increased attention, and the systemic risk 
from banks’ exposures in areas where large real estate price corrections appear especially likely 
must be actively contained. Tax incentives for taking on large mortgages should be reconsidered.
9
After consulting FINMA, the SNB can submit a proposal to the Federal Council requiring banks to hold a CCB in 
the form of CET1 capital at up to 2.5 percent of their total risk-weighted positions in Switzerland. 

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SWITZERLAND
INTERNATIONAL MONETARY FUND
27 
47.  Reforms of the framework could be considered. While the present structure seems to 
have worked well, no clear macroprudential mandate is assigned to any institution. Powers over 
specific policy instruments are clear, but not where the overarching responsibility for the financial 
stability outcome lies. In a medium-term perspective macroprudential arrangements should be 
reviewed, giving consideration to placing responsibility and powers for macroprudential policies 
with one institution or committee. Transparency and accountability could be strengthened by 
better highlighting the cross agency work to the public. Regarding transparency, the draft Swiss 
Financial Market Infrastructure Act (FinfraG) legislation strengthens information access and 
exchange for the SNB and the FDF, which is welcome.