SNB’s Sight Deposits Increased in Week It Gave Up Franc Ceiling
(Bloomberg) — Sight deposits at the Swiss National Bank increased 3 percent last week when it announced it had abandoned its currency ceiling.
Sight deposits of domestic banks increased to 339.6 billion francs ($393 billion) in the week ending Jan. 16 from 329.1 billion francs a week earlier, data published on the SNB’s website today showed.
“It indicates they probably intervened,” said Cornelia Luchsinger, economist at Zuercher Kantonalbank in Zurich.
Sight deposits are cash-like deposits commercial banks hold with the central bank. In the past, when the SNB intervened to defend its currency cap, lenders’ deposits at the central bank were credited with the amount of francs sold
In a major policy reversal, the SNB last week announced it had abandoned its three-year-old cap on the franc of 1.20 per euro and instead was deepening a negative interest rate on sight deposits. The move, which SNB President Thomas Jordan said was backed by all three governing board members, sent shock wakes through equity and currency markets. Among investors, reactions ranged from “idiotic” to “brave.”
According to a report yesterday in NZZ am Sonntag newspaper, the SNB spent some 30 billion francs on interventions in December to defend the cap and probably continued at a similar pace of about 1 billion francs a day in January before eventually giving up the ceiling.
Silvia Oppliger, a spokeswoman for the SNB, declined to comment on the NZZ report.
Finance Minister Eveline Widmer-Schlumpf said during a weekend interview that the government had “full confidence” in Jordan’s leadership.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net To contact the editors responsible for this story: Fergal O’Brien at fobrien@bloomberg.net Zoe Schneeweiss, Kevin Costelloe
