SWI CB announced it will raise the minimum reserve requirement for domestic banks, and to this end it will amend the National Bank Ordinance (NBO) as of Jul. 1, 2024.
Changes
Liabilities arising from cancellable customer deposits (excluding pension provision) will in future be included in full in the calculation of the minimum reserve requirement.
Revokes previous exception where only 20% of those liabilities counted in calculation.
SWI CB is also raising the minimum reserve ratio from 2.5% to 4%, these adjustments will ensure that implementation of its monetary policy remains effective and efficient.
Since sight deposits which are held by banks to meet minimum reserve requirements are not remunerated, the interest costs for the SWI CB will therefore be reduced.
SWI CB confirms the amendments will not affect the current monetary policy stance.
Effectiveness
The National Bank Ordinance will be amended as of Jul. 1, 2024 to raise requirement.
Aug. 2024 Update
On Aug. 19, 2024, SWI CB announced adjustment to remuneration of sight deposits.
Lowered threshold factor for remuneration of sight deposits of account holders subject to minimum reserve requirements from 25 to 22, effective as of Oct. 1, 2024.
Basis to calculate threshold unchanged: for sight deposit account holders subject to minimum reserve requirements, threshold corresponds to moving average of minimum reserve requirements over preceding 3 years, multiplied by applicable threshold factor.
For other sight deposit account holders, the threshold is in principle set at CHF 0.
Post minimum reserve rise as of Jul. 1, thresholds likely to increase over next 3 years.
Decision to lower threshold factor counteracts this increase, thereby ensuring that the implementation of monetary policy remains effective, supporting active money market.
Adjustment has no impact on current monetary policy stance; SWI CB regularly reviews remuneration of sight deposits and makes adjustments, if necessary.
Dec. 2024 Sight Deposit Adjustment
On Dec. 16, 2024, SWI CB announced it will lower threshold factor for remuneration of sight deposits of account holders subject to the reserve requirements, from 22 to 20.
The basis for calculating the threshold remains unchanged, for sight deposit account holders subject to minimum reserve requirements, the threshold corresponds to the moving average of the minimum reserve requirements over the preceding three years.
Sight deposits up to the threshold are remunerated at SWI CB policy rate, while sight deposits above the threshold are remunerated at SWI CB policy rate minus a discount. Any sight deposits held to meet minimum reserve requirements are not remunerated.
Lower threshold factor counteracts increase in thresholds due to raising of minimum reserve requirement on Jul. 1, 2024 ensuring that monetary policy remains effective.
This change to the threshold factor for remuneration is effective as of Feb. 1, 2025.
