Hey Switzerland, what the hell took ya so long?

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So the Swiss banks are finally charging negative interest rates on large CHF deposits. This begs the question, why did it take you five years to figure this one out? Hello!

A much more effective deterrent than the silly, destabilizing and expensive EUR/CHF peg.

2012-12-04T13:08:44+0000

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EUR/CHF

Jamie Coleman

8 Comments

  1. Northern banks must do the same. Put a negative interest rate of 3% per year to all accounts. To push money back to south Europe

  2. The question is, when will the SNB do it and make it official to give us all the rally we’ve been waiting for? Sometime between now and next week’s meeting?

  3. “…Much more effective deterrent than the silly, destabilizing and expensive EUR/CHF peg.”

    Yikes.
    The Swiss peg was hugely successful.
    And was anything but “expensive.

  4. Nomura analyst thinks this is setting up a good move to fade. This would require bigger cahonies than I can muster at the moment.. what’s your thoughts Jamie? Continuation or fade?
    http://www.fxstreet.com/news/forex-news/article.aspx?storyid=5fb0edfe-d8b2-4717-9b2d-a0d38c954f5a

  5. SNB’s reserves have ballooned forcing Switzerland to assume untold liability. Given the choice between negative rates and taking your-amount of risk, negative rates is by far the more logical policy.

  6. Maybe these banks needed the liquidity support? That’s functionally what it was; though of course politically they can deny they received the support….a twofer!

  7. To be honest, I have no feel for how short the market is of EUR/CHF at the moment. I don’t have a really informed opinion at the moment I’m afraid, sorry.

  8. If the SNB had gone even 100bps negative then it would have made bugger-all difference to the strength of the CHF. In June this year it would have been well inside parity vs EUR, no question; and it would have plunged Switzerland into a deep recession.
    It takes a serious amount of denial to not realise how effective the Peg has been.

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