The Governing Board of the Swiss National Bank (SNB) has decided to introduce negative interest on sight deposit account balances at the SNB. This will affect accounts kept by the SNB for banks and other financial market participants. An interest rate of –0.25% will apply to sight deposit account balances that exceed a given exemption threshold. By introducing negative interest on sight deposit account balances, we aim to take the three-month Libor into negative territory. We are therefore expanding the target range for the three-month Libor from –0.75% to +0.25%. It is thus back to its usual width of 1 percentage point.
Rapidly mounting uncertainty on the financial markets has substantially increased demand for safe investments. The worsening of the crisis in Russia was a major contributory factor in this development. Against this background, we were obliged to ensure the minimum exchange rate of CHF 1.20 per euro by intervening on the foreign exchange market.
The minimum exchange rate remains key to ensuring appropriate monetary conditions in Switzerland. This is why we remain committed to enforcing the minimum exchange rate with the utmost determination. To this end, we are prepared to purchase foreign currency in unlimited quantities and to take further measures, if required. Without the minimum exchange rate, price stability in Switzerland would be seriously compromised. The introduction of negative interest will support the enforcement of the minimum exchange rate.