SNB INTRODUCES NEGATIVE INTEREST RATES

Swiss National Bank introduces negative interest rates

Minimum exchange rate reaffirmed, and target range for threemonth

Libor lowered into negative territory

The Swiss National Bank (SNB) is imposing an interest rate of –0.25% on sight deposit

account balances at the SNB, with the aim of taking the three-month Libor into negative

territory. It is thus expanding the target range for the three-month Libor to –0.75% to 0.25%

and extending it to its usual width of 1 percentage point. Negative interest will be levied on

balances exceeding a given exemption threshold.

The SNB reaffirms its commitment to the minimum exchange rate of CHF 1.20 per euro, and

will continue to enforce it with the utmost determination. It remains the key instrument to

avoid an undesirable tightening of monetary conditions resulting from a Swiss franc

appreciation. Over the past few days, a number of factors have prompted increased demand

for safe investments. The introduction of negative interest rates makes it less attractive to hold

Swiss franc investments, and thereby supports the minimum exchange rate. The SNB is

prepared to purchase foreign currency in unlimited quantities and to take further measures, if

required.

An instruction sheet containing additional information on the negative interest rate and the

calculation of the exemption threshold is attached.

http://www.snb.ch/en/mmr/reference/pre_20141218/source/pre_20141218.en.pdf