The Swiss National Bank adjusts the interest rate of sight deposits.
Published: Monday, Oct 30th 2023, 08:10
Updated At: Monday, Aug 19th 2024, 11:10
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The Swiss National Bank (SNB) is adjusting the interest rate on sight deposits. The SNB emphasized in a statement on Monday that this does not change the monetary policy orientation.
Specifically, the SNB is reducing the factor for the limit that is applied to the interest rate for current account holders subject to minimum reserve requirements. This will be lowered from 25 to 22 at the beginning of October.
The SNB prime rate will be applied to sight deposits up to this limit, the statement continued. Sight deposits above the limit earn interest at the SNB prime rate minus a discount. According to the SNB, the basis for calculating the limits remains unchanged.
In addition, sight deposits held to fulfill the minimum reserves do not earn interest, the communiqué continues.
No change in monetary policy
The SNB emphasized that the adjustments will not change the current monetary policy orientation. According to the SNB, the adjustments are rather intended to ensure the continued effective implementation of monetary policy and support an active money market.
The central bank explained that with the previously announced increase in the minimum reserve requirement as of July 1, 2024, the limits are likely to rise over the next three years. The factor reduction that has now been decided will counteract this increase.
Total sight deposits at the SNB comprise the largest item, the sight deposit accounts of domestic banks. These sight deposits form the basis for the SNB's management of liquidity on the Swiss franc money market. The SNB thus influences the interest rate level on the money market through the interest paid on sight deposits.
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