TY - BOOK ID - 84540825 TI - Current Account Surpluses and the Interest Rate Island in Switzerland PY - 1995 SN - 146236117X 145523835X 1281155624 9786613776983 1455225126 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Banks and Banking KW - Exports and Imports KW - Foreign Exchange KW - Interest Rates: Determination, Term Structure, and Effects KW - International Investment KW - Long-term Capital Movements KW - Current Account Adjustment KW - Short-term Capital Movements KW - International economics KW - Finance KW - Currency KW - Foreign exchange KW - Foreign assets KW - Real interest rates KW - Current account surpluses KW - Interest rate parity KW - Purchasing power parity KW - External position KW - Financial services KW - Balance of payments KW - Interest rates KW - Investments, Foreign KW - Switzerland UR - https://www.unicat.be/uniCat?func=search&query=sysid:84540825 AB - This paper describes some long-run aspects of the Swiss balance of payments, highlighting two macroeconomic phenomena that make Switzerland stand out among other countries: first, it has had a persistent current account surplus and the largest ratio of net foreign assets to GDP in the world; second, its real interest rates have been significantly lower than those of most other industrialized countries, earning it the label “interest rate island”. These two distinctive features may be related, and ultimately both may result from an excess of national savings over investment for many years. The real interest differential may largely be attributed to a foreign exchange rate risk premium, which compensates Swiss residents for holding net assets in foreign currency and foreign residents for bearing net liabilities in Swiss francs. ER -