Swiss central bank increases minimum reserve requirements for banks

The SNB says it wants to ensure the “continued effective and efficient implementation of monetary policy”. Keystone/Peter Schneider

The Swiss National Bank (SNB) is increasing the minimum reserve requirements for domestic banks. To this end, it is amending the national bank ordinance starting on July 1, 2024.

Specifically, according to a press release issued on Monday, liabilities from callable customer deposits (excluding tied pension assets) will be included in full in the calculation of the minimum reserve requirement in the future, as will other relevant liabilities. The previous exception that only 20% of these liabilities are to be taken into account for the calculation will therefore be eliminated. The SNB is also raising the minimum reserve ratio to 4% from the previous 2.5%.

In doing so, the SNB says it wants to ensure the “continued effective and efficient implementation of monetary policy”. As banks’ so-called sight deposits, which are held to fulfil the minimum reserve requirement, do not earn interest, the SNB’s interest expense will fall. The adjustments do not affect the current approach to monetary policy.

Last year, the SNB booked a loss of CHF8.5 billion ($9.32 billion) on its Swiss franc positions, a large part of which (CHF 7.4 billion) came from the interest paid on banks’ sight deposits.

Adapted from German by DeepL/dkk

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