A new inheritance agreement between Switzerland and France, a Swiss call for fair banking data exchange rules that apply to everyone, and the still «indispensable» franc cap: the highlights of the weekend’s financial summit in Washington.
«We’re very close to a deal … I’ve asked the French tax authorities to dispel the last reservations,» said French Finance Minister Pierre Moscovici on Saturday at the spring meeting of the 188-nation International Monetary Fund (IMF) and its sister lending agency, the World Bank.
Moscovici added that he had met his Swiss counterpart Eveline Widmer-Schlumpf, whom he had invited to Paris next month for the signing ceremony. The agreement still has to be ratified by the Swiss parliament.
The new tax deal will apply in the country where the heir lives and not, as at present, the deceased. Under France’s existing 1953 convention governing inheritance with Switzerland, a French-based heir of a person residing in Switzerland is taxed by the relevant Swiss canton.
Moscovici also said he had asked Switzerland to be «cooperative» concerning the automatic exchange of banking data, which the G20 group of finance ministers want to make the international norm in the fight against tax evasion.
«Barriers are falling,» he said.
Global standards
For her part, Widmer-Schlumpf found herself in Washington on the defensive yet again, pushing for fair rules and global standards.
Switzerland was prepared «under certain conditions» to discuss the automatic exchange of information, she said.
«For Switzerland it is important that the standards also apply to off-shore financial centres and economic constructs such as trusts which adhere to Anglo-Saxon law,» she said.
Widmer-Schlumpf added that it wasn’t clear which information should be exchanged and that there must exist basic reciprocity – «a state must be prepared to deliver the same data that it demands from another state».
On Friday, Switzerland was one of 14 countries called out by the Paris-based Organisation for Economic Co-operation and Development (OECD) for not meeting new global standards meant to crack down on tax dodgers.
Franc cap
Also speaking at the IMF meeting, the president of the Swiss National Bank (SNB) said the risk of a resurgence in the global financial crisis meant the SNB’s exchange rate cap was still essential.
Thomas Jordan said Switzerland’s determination to cap the franc at 1.20 per euro had wide backing from other countries.
«‘Adjustment fatigue’ could lead to a resurgence of the crisis and one must add that this would have an impact on Switzerland,» he said on Saturday.
«In such an uncertain environment, the minimum exchange rate policy of the central bank remains indispensable,» Jordan said, adding that the franc was still «very high».
New risks
Wrapping up the meeting on Saturday, world finance leaders issued a sombre assessment of the global economy, saying recovery remains uneven with growth and jobs in short supply.
The steering committee for the IMF issued a final communiqué that called for decisive action to bolster growth. However, the major economies remained at odds over the best mix of policies to pursue.
«An uneven recovery is emerging but growth and job creation are still too weak. New risks are arising while several old risks remain,» the IMF group said.
The finance leaders sought to project an air of cooperation even though they were unable to resolve sharp differences that have risen to the surface following an initially botched bailout of Cyprus in March. The banking troubles in the small Mediterranean island nation renewed fears that a prolonged European debt crisis still poses significant risks to the global economy.