Geldcast Update: more money for the banks, less for the state and cantons
The Swiss National Bank’s (SNB) decision to raise interest rates into positive territory comes at a cost.
It means the SNB is now expected to pay commercial banks around CHF7 billion next year in interest payments for the money they deposit at the central bank. This leaves less money for the SNB to distribute between the federal government and cantons.
Inflation in Switzerland slowed to 3.3% in September but still surpassed the SNB’s 0-2% target range for the eighth month in a row. The last time it was this high was in 1993, which is why the central bank hiked its key interest rate by 0.75 percentage points to 0.5% on September 22, ending a near eight-year era of negative interest rates.
In the era of negative interest rates, banks were able to borrow from each other at rock-bottom rates. As a result, banks are still swimming in money. How will the SNB persuade banks to pay higher rates to borrow money again? And why does it have to dig deep into its own pockets to achieve this end?
From stock exchanges and bitcoin to inflation and monetary policy – the Geldcast update features the latest from the world of international finance. Clear and entertaining for everyone who wants to stay up to date. The podcast is hosted by monetary economist and business journalist Fabio CanetgExternal link.
Author Fabio Canetg completed his doctorate in monetary policy at the University of Bern and the Toulouse School of Economics. Today he is a lecturer at the University of Bern.
As a journalist, he works for SRF Arena, Republik Magazin and SWI swissinfo.ch. He hosts the monetary policy podcast “Geldcast”.
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