ZURICH (Reuters) – The Swiss National Bank on Monday said it was adjusting the interest it pays with money commercial banks lodged with the central bank overnight.
Sight deposits which are held to meet the minimum reserve requirements will no longer be remunerated, while it adjusted the level that different interest rates applied.
“The changes have no impact on the current monetary policy stance,” the SNB said. “These adjustments will ensure that monetary policy implementation remains effective and will reduce interest costs for the SNB,” it added.
From Dec. 1, banks will be paid the SNB’s policy rate, currently 1.75%, on deposits equivalent to 25 times their minimum reserve requirements. Previously they were paid interest for cash held at 28 times the requirement.
Sight deposits held above the bank’s individual threshold will be paid the Swiss National Bank ‘s policy rate, minus a discount of 0.5 percentage points.
Conclusion
The Swiss National Bank has recently made adjustments to the interest rates it pays on commercial banks’ deposits, a move that aims to streamline its monetary policy implementation without changing its current stance. Starting from December 1, 2023, commercial banks will receive the SNB’s policy rate, which currently stands at 1.75%, on deposits equivalent to 25 times their minimum reserve requirements, down from the previous rate paid on 28 times the requirement. Additionally, sight deposits held above individual thresholds will be remunerated at the policy rate minus a 0.5 percentage point discount.
These changes are designed to optimize the effectiveness of monetary policy and reduce interest costs for the Swiss National Bank. It’s important to note that these adjustments are not indicative of a shift in Switzerland’s current monetary policy, but rather an effort to fine-tune its implementation. The move reflects the central bank’s commitment to maintaining a stable and efficient financial system while making prudent adjustments to improve its overall functioning.
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