© Michael Müller | Dreamstime.com Official data recently released by the Swiss National Bank (SNB) show it sold 51.5 billion Swiss francs while acquiring US dollar and euro-denominated assets in a bid to weaken the franc over the first quarter of 2020. The data followed comments by SNB President Thomas Jordan signalling that even larger …Read More »
Articles by Investec
On 18 June 2020, the Swiss National Bank (SNB) said it would maintain its negative rate of interest (-0.75%) and remains willing to intervene more strongly in the foreign exchange market.
The coronavirus pandemic has led to a severe downturn in economic activity and a decline in inflation both in Switzerland and abroad.
The bank presented a new lower inflation forecast than the one it issued in March 2020.
The red line in the chart above shows deflation exceeding 1% this year, remaining in deflation in 2021. The yellow line is the bank’s forecast in March 2020. The forecast for the current year is negative (−0.7%). The inflation rate is likely to rise in 2021, but still be slightly negative (−0.2%), before returning to positive territory in 2022 (0.2%).
© Marekusz | Dreamstime.com The rate on deposits at the Swiss National Bank (SNB) is currently -0.75%. And while taking the rate further into negative territory is not the base case scenario, it cannot be excluded, according to some economists at the bank UBS. The probability that the SNB lowers rates further is not a …Read More »
Thomas Jordan, Chairman of the Swiss National Bank
Thomas Jordan, chairman of the Swiss National Bank (SNB), told the NZZ am Sonntag newspaper recently that central bank interest rates might need to go further into negative territory.
Responding to growing criticism of negative central bank interest rates, Jordan said negative interest rates could continue and a further reduction is possible.
The SNB did not introduce negative interest rates to harm people, said the SNB chairman. However, he still considers the Swiss franc to be highly valued.
Jordan rejected the idea that the public might withdraw their money from banks if interest rates fall further. He thinks the costs and risks associated with storing cash are higher than the costs of current negative
Swiss National Bank – © J0hnb0y | Dreamstime.com
The Swiss National Bank (SNB), Switzerland’s central bank, has earned CHF 388 million from negative interest rates since introducing them in 2014 to tame the rising strength of the Swiss Franc, according to the newspaper SonntagsBlick.
On 15 January 2015, the SNB announced that it was abandoning its policy of maintaining an exchange rate cap of 1.20 francs to 1.00 euro. At the same time it increased negative interest on sight deposits from -0.25% to -0.75%.
On one hand negative interest rates are beneficial. They generate additional income for the SNB, some of which finds its way to cantonal governments, while reducing the cost of servicing government debt. In addition, they help exporters by putting downward
On 21 June 2018, the Swiss National Bank (SNB) announced its decision on interest rates, which it left unchanged.
Fritz Zurbrügg, Thomas Jordan and Andréa Maechler
Switzerland’s economy has been sailing into the headwinds of a strong currency since the SNB scrapped its exchange rate cap in January 2015 and the Swiss franc briefly went beyond parity with the euro.
To weaken the currency, the SNB introduced negative interest rates and went on a spree of asset buying.
Yesterday, the Bank said it will maintain its -0.75% interest rate and continue to buy assets as required. 5 years ago, the the SNB set up an operation in Singapore so that it can buy and sell assets around the clock.
High on the list of SNB concerns is
According to Le Matin, economists at Swiss Life think the rise of the Swiss franc could be over and predict it will weaken to 1.22 to the euro by the end of the year.
© Valeriya Potapova _ Dreamstime.com
At the same time they point to risks that could send the currency in the opposite direction, such as the election in Italy, Brexit negotiations and uncertainty surrounding government in Germany.
The Swiss National Bank (SNB) abandoned its Swiss-franc-euro exchange rate cap of 1.20 in 2015 under market pressure. Since then the bank has bought lots of foreign assets to restrain the strength of the Swiss franc – when buying foreign assets the bank sells Swiss francs, increasing their supply, which lowers the
© Kevkhiev Yury | Dreamstime.com – Click to enlarge The Switzerland attorney general’s office is shifting its focus to banks operating in the country as it continues to investigate Brazil’s bribery scandal, after plea deals with individual executives provided fresh insights into how the illicit funds flowed through the financial system. Attorney General Michael Lauber …Read More »
Swiss banks focused on property lending are taking more risks to compensate for the impact of record-low interest rates, increasing the threat of a real-estate bubble, Swiss National Bank Vice President Fritz Zurbruegg said.
© Vladek | Dreamstime.com – Click to enlarge
“Exceptionally low interest rates are putting pressure on interest rate margins and this is weighing on the profitability of Swiss banks,” Zurbruegg said in a speech in Bern on Thursday. That “creates an incentive for banks to step up their exposure to interest-rate risk and adopt an imprudent attitude in their affordability assessment.”
Swiss lenders have been struggling to offset the squeeze of a minus 0.75 percent deposit rate imposed by the SNB to protect the country’s economy and weaken the Swiss franc. While the return on investments from mortgages to bonds has dropped, most of the country’s banks — including the two largest UBS Group AG and Credit Suisse Group AG — have steered clear from charging private clients’ deposits.
While banks with a larger focus on Switzerland have “taken on additional interest-rate risk” since the SNB decided to lower borrowing costs below zero percent, lenders’ exposure is “manageable at the moment” partly amid stricter capital rules, Zurbruegg said.
© Valeriya Potapova | Dreamstime.com – Click to enlarge The Swiss National Bank, which has the lowest interest rate among the world’s major central banks, may be done cutting. SNB President Thomas Jordan and his fellow policy makers will keep the deposit rate unchanged at minus 0.75 percent until at least the end of the …Read More »
Today, the Swiss National Bank (SNB) announced a new agreement with the Federal Department of Finance, to pay the Swiss confederation and cantons CHF 1 billion per year, as was previously the case. The deal will run from 2016 to 2020, according to an official press release.
© Phillip Judd
The deal differs from the past because it requires shortfall payments. In years when the SNB doesn’t have enough reserves, the payment can be reduced and any shortfall made up in following years. If reserves exceed CHF 20 billion, the annual payout can rise to a maximum CHF 2 billion.
Switzerland’s central bank’s shares are listed on the Swiss stock exchange. Its shareholders include Swiss cantons, Swiss cantonal banks, and numerous private individuals. At the end of 2015, cantonal banks and cantons owned around 52%, with the cantons of Bern (6.6%), Zurich (5.2%), Vaud (3.4%), and St. Gallen (3%), holding the largest shares. The largest personal holding was held by German national Theo Siegert (6.6%).
The Swiss government urged rejection of a popular initiative that would transform the monetary system and end fractional-reserve banking, according to its dispatch to Parliament. The measure seeks to put the central bank solely in charge of money supply and forbid commercial banks from granting loans that aren’t fully backed by deposits, effectively ending the way banking has been conducted for centuries. It’s a system known as Vollgeld — or “whole money” in German — and proponents say it would prevent financial market bubbles.
Yet the Swiss government argued voters should reject the measure because “such a profound transformation of the monetary system would carry substantial risks.” “If the initiative were to be accepted, Switzerland would become a guinea pig for untested reforms,” the Bern-based government said in a statement on Wednesday, accompanying its dispatch to parliament. “Acceptance would complicate the Swiss National Bank’s monetary policy and lead to considerable risks for the Swiss economy.”
Advocates of Vollgeld say their plan would prevent the credit boom blamed for the 2008 global financial crisis, and possibly the next. The central bank would be able to ensure the real economy has the liquidity it needs, and no more, proponents say.
© Yulan | Dreamstime.com – Click to enlarge The Swiss National Bank can cut interest rates further into negative territory if needed, President Thomas Jordan said. “We have still some room to go further if necessary,” Jordan said Saturday in an interview in Washington with Bloomberg Television’s Francine Lacqua. Jordan, who is attending the annual …Read More »
The Swiss National Bank is offering a rare look into how it sets monetary policy.
A video of SNB President Thomas Jordan and fellow members of the governing board shows them beginning their quarterly policy assessment discussing the state of the economy with about 30 people. According to the voiceover, the group comprises experts from different departments engaged in a question-and-answer session.
“Welcome to our policy assessment,” Jordan tells the gathering. “Today we must ask ourselves important questions — as you know monetary policy hasn’t become any easier.”
The film — which also features snippets of the central bank’s December 2015 press conference — was recorded over the past two years, according to SNB spokeswoman Silvia Oppliger. The segment that includes Jordan’s comment also shows Jean-Pierre Danthine, who retired as vice president in June 2015.
Here’s where transparency ends and the SNB’s sense of secrecy takes over.
After the exchange with experts — which examines Swiss and global economic developments — “the governing board withdraws to deliberate,” according to the video, published on the bank’s Youtube channel on Sept. 30.
Swiss National Bank, © Swisshippo | Dreamstime.com
Anyone feeling let down that the European Central Bank didn’t do much last week might just want to skip the Swiss rate decision on Thursday to avoid more disappointment.
While the Swiss National Bank may be infamous for some seismic policy changes in the last few years, those bombshells weren’t dropped at scheduled meetings. In fact, the last time the institution altered interest rates at a decision in its public calendar was more than seven years ago.
The upshot: While the SNB may have a few more tricks up its sleeve, it’s very unlikely to pull any of them out on Thursday. With the franc trading weaker than 1.08 per euro for the past two months, all the economists in a Bloomberg survey expect the central bank to keep its deposit rate unchanged at a record low of minus 0.75 percent and affirm its intervention pledge.
“The recent past would support the thesis that changes don’t happen at a regular quarterly policy meeting,” said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. “The ECB didn’t see the need to modify policy at its most recent decision, as its baseline scenario remains intact, so the same is probably true for the SNB. It should keep rates at their current levels and selectively intervene in currency markets.
Brought to you by Investec Switzerland.
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The value of the Swiss National Bank’s U.S. stock portfolio jumped to a record in June, helped by equity market gains.
The holdings climbed to $61.8 billion from $54.5 billion at the end of March, according to calculations by Bloomberg based on the central bank’s regulatory filing to the U.S. Securities and Exchange Commission and published on Wednesday. SNB spokesman Walter Meier declined to comment on the filing, which is the only detailed disclosure by the central bank of its equity portfolio.
Unlike some other big central banks, the SNB, led by President Thomas Jordan, holds equities as well as bonds. At the end of June, 20 percent of its 609 billion-franc ($628 billion) pile of foreign currencies was in stocks. The S&P 500 Index climbed 1.9 percent in the second quarter.
The SEC filing showed the institution had stakes in 2,581 companies listed in the U.S. Its biggest holdings were Apple Inc., Exxon Mobil Corp. and Microsoft Corp., according to data compiled by Bloomberg. It increased the number of shares it holds in all three companies over the quarter.