Switzerland Is A Federalist State, Where The Power Is Divided

1467 WordsApr 14, 20176 Pages
Switzerland is a federalist state, where the power is divided between the three levels: the Confederation, the cantons, and the communes. The way Switzerland handles matters is through the principle of subsidiarity, where a smaller branch of the government can handle issues and solve them, instead of having the more powerful branch of government handle those issues. In Switzerland, the people hold the most power, which allows the people to vote on the country’s issues and voice their opinions to each of the individual parts of the political systems. The confederation, the highest of the three political systems, handles duties relating to foreign and security policy, customs and monetary policy, national legislation, and defence. The…show more content…
They both have central bank independence. The Swiss National Bank can affect money supply through open market operations where they auction repo transactions by volume tender or by variable rate tender. The Swiss National Bank can influence the money market interest rate in Switzerland by changing the interest rate conditions and the price formation in Switzerland 's money market by making offers in the electronic market. This can help stabilize money market rates in the short term (Monetary Policy Instruments). The Swiss National Bank (SNB) is maintaining its expansionary monetary policy. Interest on sight deposits at the SNB is to remain at –0.75%. The Swiss National Bank will remain active in the foreign exchange market as necessary. The SNB’s expansionary monetary policy is aimed at stabilizing price developments and supporting economic activity. The Swiss franc continues to be significantly overvalued. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency. The negative interest rate is suppose to induce investors to not buy investments so the Swiss currency stabilizes (Monetary Policy Assessment of 16 March 2017). Depicted on the previous page is the money supply for M1 in Switzerland includes

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