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SNB joins others to shore up finance system

The Swiss National Bank (SNB), along with a number of other central banks, has announced measures to inject liquidity into the global financial system.

Wednesday’s announcement pushed up world stock markets, which had tumbled earlier in the day after a meeting of Europe’s finance ministers had failed to stem fears that the euro currency union was hurtling toward a breakup.

In Zurich the SMI index of leading shares ended the day 2.19 per cent up.

The coordinated action by the SNB, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Federal Reserve will make it cheaper for banks to obtain United States dollars.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the SNB said on its website.

The new pricing system will apply to all operations conducted from December 5.

The central banks also agreed to establish similar bilateral arrangements for any of their own currencies “as a contingency measure”. These will be implemented “should market conditions so warrant”.

The banks “judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise,” the SNB statement explained.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR