BERN, Switzerland – Switzerland’s central bank has imposed negative interest rates on commercial bank deposits, with the aim of preventing the Swiss franc from gaining more strength against other currencies.
The move forces commercial banks to pay to deposit their francs with the Swiss National Bank.
In a statement Thursday, the central bank said it was introducing a rate of minus 0.25 per cent on sight deposit account balances of more than 10 million Swiss francs ($10.4 million).
It said the “introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate.”
Since 2011, the SNB has set the minimum exchange rate of the euro at 1.20 Swiss francs, helping sharply raise the value of major currencies like the dollar against the franc.