SNB Sight Deposits Climb After Swiss Intervene to Defend Cap

Sight deposits of domestic lenders with the Swiss National Bank increased last week after it purchased currency defend its cap on the franc.

Average sight deposits jumped to 316 billion Swiss francs ($322 billion) from 313 billion francs in the previous week, the Zurich-based central bank said in a statement on its website today. Average sight deposits calculated on an accumulated monthly basis remained at 316.1 billion francs. SNB interventions typically boost lenders’ deposits.

The SNB said on Dec. 18 it was imposing a negative deposit rate as of Jan. 22 after a tide of money flowing from Russia’s financial crisis pushed the franc closer to its 1.20-per-euro ceiling. SNB President Thomas Jordan also said that the central bank had restarted intervening in currency markets.

Sight deposits -- cash-like holdings of commercial banks at the central bank -- soared in 2011 and 2012 when the SNB bought foreign currencies to defend its cap.

At the same time, the purchases pushed the SNB’s foreign-currency holdings to the equivalent of about three quarters of Switzerland’s annual economic output. The central bank halted purchases in September 2012 as the euro-area crisis eased, and currency holdings have remained relatively steady since then. They stood at 462.4 billion at the end of November, and the SNB will publish data for December on Jan. 7.

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