Switzerland (OECD economic surveys)

Table of contents
Basic statistics of Switzerland
Executive summary
Assessment and recommendations
	The economic recovery has been broadly balanced but risks to the outlook have increased
		Figure 1. Real GDP growth and its main contributors
		Figure 2. Macroeconomic indicators
		Table 1. Short-term economic projections
	The strong appreciation of the Swiss franc is threatening the export sector
		Figure 3. Current account and main components
	Some concerns are emerging that a housing market bubble may start building up
	Monetary policy needs to remain expansionary
	Fiscal policy should remain prudent
	Incentives for households to leverage their wealth should be reduced
		Figure 4. Household assets and liabilities in high-income OECD countries, 2009
	Changes in the tax structure could strengthen potential activity
	Cross-border issues in taxation need to be addressed
		Box 1. Three key recommendations on improving the tax system
	Reform of regulation of the large, internationally active banks is essential to limit potential financial risks
		Table 2. Banks’ total assets in per cent of GDP
	Macroprudential considerations need to be incorporated effectively in prudential regulation
	Some reform of the regulatory framework for the small banks active in domestic lending markets would help reduce potential risks further
		Box 2. Three key recommendations on reducing risks in the financial system
	Meeting greenhouse gas emission reduction targets requires more cost-effective policies
		Figure 5. Total per capita greenhouse gas emissions and percentage contributions to greenhouse gas emissions by sector
	The implicit carbon price in road transport is low
	The policy mix in the residential sector can be made more cost effective
	Linking the Swiss and the EU emission trading system will help, but steps are required in the transition to the new system
		Box 3. Three key recommendations on reducing greenhouse gas emissions
	Annex A1. 
Progress in structural reforms
Chapter 1.
Making the tax system less distortive
	The main characteristics of the Swiss tax system
		Figure 1.1. Swiss tax and compulsory contribution revenues in comparison to tax revenues in neighbouring countries
		Figure 1.2. Expenditure by level of government
		Box 1.1. Tax setting powers
	Making the tax system more supportive of growth
		Shifting taxation from direct to indirect taxes would reduce economic distortions
			Table 1.1. Structure of tax revenue
			Figure 1.3. VAT revenue ratio
			Table 1.2. Property taxes
		Reducing the overall contribution wedge on labour
			Figure 1.4. Total contribution wedge and total tax wedge on labour income by main family type and wage levels in international comparison
			Box 1.2. Health insurance contributions and support for low income households
		Work incentives for second earners could be improved
			Figure 1.5. Measure of the income tax wedge for the second earner relative to the main earner
		Leveling the playing field between financial services and other sectors
	Reducing distortions in households’ financial decisions
	Alleviating some negative impacts of tax decentralisation and competition on efficiency and equity
		Corporate income tax decentralisation has favoured low rates but also generatessome distortions
			Figure 1.6. Corporate tax burden of Swiss cantons in international comparison
		Personal income tax competition raises some equity issues
			Figure 1.7. Income distribution and tax rates across cantons, 2007
			Box 1.3. Recommendations to improve the tax system
	Notes
	Bibliography
Chapter 2.
Reducing risks in the financial system
	The largest Swiss financial institutions require adequate legislation to limit systemic financial risks
		The 2 big banks continue to pose large systemic risks
			Table 2.1. Financial system profile
			Figure 2.1. Swiss big banks’ total and risk-weighted assets
		The initial policy response to financial risks in the large banks has been insufficient
		New legislation on the Big-2 is welcome, although several improvements could beconsidered
			Figure 2.2. Capital adequacy ratio of Swiss big banks (in %)
			Figure 2.3. The new capital regime for SIFIs
			Figure 2.4. Leverage and capital adequacy ratios of major international banks
			Figure 2.5. Geographical composition of assets of Swiss big banks
	Regulation of smaller financial institutions
		Cantonal banks
			Figure 2.6. Total domestic mortgage lending by type of bank
			Table 2.2. Currency deposit (CD) ratings by bank category, 2011
		Reform of pension funds needs to progress further
			Figure 2.7. Funding ratios of pension funds in Switzerland
			Table 2.3. Breakdown of funding ratios of Swiss pension funds (May 2010)
	Towards a new macroprudential policy framework
		The macroprudential framework should be reviewed
			Figure 2.8. Policy framework
		Specific macroprudential tools tools should apply to mortgage markets
			Figure 2.9. Interest rates on mortgage loans, 1996-2011
			Figure 2.10. Real house price developments in Switzerland
			Box 2.1. Summary of main recommendations for strengthening financial regulation
	Notes
	Bibliography
Chapter 3.
Reducing greenhouse gas emissions in a cost effective way
	Greenhouse gas emissions reduction – meeting new challenges
		Switzerland has been a forerunner in climate change mitigation
			Figure 3.1. GHG emissions in a selection of countries, 1990 and 2009
			Figure 3.2. Structure of GHG emissions, 2009
			Figure 3.3. GHG emissions from fuel combustion over time
		The GHG emission reduction targets are ambitious, especially if nuclear energy will bephased out
		… and require more cost effective policies
			Table 3.1. Model based estimations of CO2 prices under the 2020 scenario
	More could be done at low cost in road transport
		Emissions from road transport are not yet addressed adequately
			Table 3.2. Estimated external costs from transportation in 2005
			Box 3.1. Current policies in the transport sector impacting climate policy goals
			Figure 3.4. Excise duties on transport fuels across selected countries, 2010
		Appropriate road pricing would create an incentive for reduced traffic
	The policy mix in the residential sector could be made more cost effective
		Incentives for energy-saving renovations are weak
			Figure 3.5. Role of residential per capita GHG emissions across countries, 1990-2009
			Figure 3.6. Principal energy sources for residential heating
		Rental policy should take into account environmental needs more appropriately
			Box 3.2. Swiss climate change mitigation policy in the residential sector
		The use of the CO2 levy in the residential sector should be revised
		Improving rent regulation and the use of the CO2 levy should be complemented withbetter information
	Incentives to reduce emissions would have to be improved in industry and agriculture
		In industry, market based instruments are in place…
			Figure 3.7. Energy intensity in the manufacturing sector
			Box 3.3. Swiss climate change mitigation policy in industry
		… but incentives to reduce CO2 emissions remain suboptimal
		There is still potential for GHG emission reductions beyond CO2 in agriculture
			Figure 3.8. Developments in non-CO2 greenhouse gas emissions in Switzerland
			Box 3.4. Main policy recommendations for reducing greenhouse gas emissions in a cost effective way
	Notes
	Bibliography