ZURICH (Reuters) - The Swiss National Bank (SNB) said on Wednesday it was considerably reducing the number of institutions exempt from negative rates on their cash deposits held at the central bank.
The SNB charges 0.75 percent on some Swiss franc deposits to try to deter speculative flows into the currency. This measure has also hit Swiss savers and the 673 billion Swiss franc ($700 billion) pension fund industry, which is subject to fees on its franc deposits.
At the SNB’s March policy meeting, chairman Thomas Jordan said exceptions to charges on franc deposits are not in the central bank’s interest because it undermines the effectiveness of monetary policy.
Negative interest will now also apply to the so-called sight deposit accounts held at the SNB by enterprises associated with the Confederation, the Federal Pension Fund, and the SNB’s pension fund, the central bank said in a statement.
The affected account holders will be accorded the minimum exemption threshold of 10 million Swiss francs, to which negative interest does not apply, the SNB said.
The bank said it would continue to monitor the remaining sight deposit accounts, such as those held by compensation funds for old age, disability, and loss of earned income, that are not subject to negative rates.
The news sent the franc lower against the euro to trade down 1.1 percent at 1.04 francs per euro by 1230 GMT. EURCHF=EBS
($1 = 0.9631 Swiss francs)
Reporting by Alice Baghdjian and Joshua Franklin; Editing by Toby Chopra