Swiss Finance Minister criticises US, Europe over ‘Time Bomb’ debt levels

According to Swiss Finance Minister Karin Keller-Sutter in a newspaper interview, high debt levels in the United States of America and Europe are threats to international financial stability and thus, by extension, threats to Switzerland.

In an interview with Swiss daily Blick, Keller-Sutter underscored the “disciplined” finances of Switzerland, which made it well prepared for the economic difficulties entailed by both the COVID-19 pandemic and Russia’s invasion of Ukraine.

Other countries are “so indebted they’re hardly able to act any more”, she mentioned, pointing to France.

“Or take a look at America. That’s a time bomb. The mini-crash on the stock markets at the start of August was a warning shot,” the minister said.

“It was an expression of investors’ fear of a recession. Debt levels in the US and Europe are a risk to international financial stability and a risk for Switzerland,” she added.

Keller-Sutter also mentioned a state-backed scheme in which Swiss bank UBS would have to hold more capital following the acquisition of former rival Credit Suisse last year after it collapsed.

She said extra capital requirements as necessary to protect Switzerland against another banking meltdown.

UBS CEO Sergio Ermotti has criticised the proposal, and she was asked whether she was in touch with him about it, saying:

“No, I haven’t been in contact with him any more. This is now a normal political process.”

She was also asked for her opinion on the speculation that UBS might move its headquarters abroad if it feels that the conditions are no longer conducive in Switzerland.

“The Federal Council (cabinet) believes it’s good for the economy to have a large Swiss bank. But the bank must decide for itself how it wants to position itself.”

UBS has repeatedly stated that it remains committed to Switzerland.