A semiannual US Treasury review of major trading partners removes Switzerland from its monitoring list. It is a step that is likely to go largely unnoticed, at least domestically.

The US Treasury has decided that the franc is no longer being manipulated quite as heavily as it had been in the recent past. At least that is the take of a semiannual report released Tuesday and delivered to Congress reviewing the macroeconomic and foreign exchange policies of major trading partners. Still, the step is likely to elicit little more than yawns in Swiss government and financial circles.

The report reviews the country's 20 largest trading partners, evaluating them based on whether they hold significant trade or current account surpluses and make «persistent, one-sided» interventions in favor of their sovereign currencies, in effect manipulating exchange rates.

The Swiss were removed from the monitoring list after the report found they had only met one of the three criteria described above in the four quarters to June 2023, the second successive time the country had done so. Before that, the country had exceeded the thresholds for all three criteria.

Continued Engagement

At the time, that had prompted a certain amount of concern and the Treasury indicated it started to engage with Switzerland bilaterally to address what it called external imbalances. Now says that it continues to engage with the country about macroeconomic issues, which in fact is the only action that the report can prompt. The probably local reaction to that? Again, a big nada.

Indeed, at best the original blacklisting was only referenced in passing in 2020 at a time when the Swiss National Bank (SNB) was still pursuing a negative interest rate regime. But even then, no one took the finger being pointed squarely in the direction of the domestic economy all that seriously.

With that being said, South Korea was also removed from the monitoring list while Germany, Malaysia, Singapore, Taiwan, and Vietnam remain on it. China, which has met at least one of the three criteria since October 2016, continues to be closely monitored given its general lack of transparency related to its exchange rate mechanism, an outsized trade imbalance, and failure to publish data about foreign exchange intervention.