Switzerland imposed its first negative deposit rate since the 1970s and threatened further action to stem a tide of money flowing from Russia’s financial crisis.
Swiss National Bank President Thomas Jordan cited the Russian turmoil as a “major contributory factor” for the surprise decision to introduce a charge of 0.25 percent on sight deposits, the cash-like holdings of commercial banks at the central bank. The SNB also lowered its target range for the three-month Libor in an attempt to push the rate below zero. It fell to minus 0.046 percent today.
The SNB move hints at the investment pressures that resulted after Russia’s surprise interest-rate increase this week failed to stem a run on the ruble. Swiss officials acted as the turmoil, along with the imminent threat of quantitative easing from the ECB, kept the franc too close for comfort to its 1.20 per euro ceiling.
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