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
Topics:
Investec considers the following as important: 1) SNB and CHF, 3.) Investec, Featured, newsletter
This could be interesting, too:
Mark Thornton writes The Great Chocolate Crisis of 2024
Mustafa Ekin Turan writes How EU Law Has Made the Internet Less Free for Everyone Else
Thomas J. DiLorenzo writes Attention mises.org Readers! Treat the Students in Your Life to The Best Week of Their Year
Octavio Bermudez writes Mises in Argentina: Lessons of the Past for Today
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 pressure on the Swiss franc and help to nudge inflation up to more normal levels.
On the other hand they hurt savers. Despite few banks passing on negative rates to retail customers, some are describing them as a tax because of their negative effect on pension funds.
Tags: Featured,newsletter