Return to positive interest rates: Why reserve tiering?

November 17, 2022
Money Market Event, Geneva

Download file now

The file can be downloaded with the button below.

Summary

Since the end of 2020, there has been a resurgence of inflation globally. Confronted with this situation, various central banks, including the Swiss National Bank (SNB), have tightened their monetary policies. The SNB has raised its policy rate twice this year, with the second hike, in September, lifting it back into positive territory.

The switch to a positive rate environment meant that the SNB had to adopt a new approach to implementing its policy in the money market. The approach features two elements: reserve tiering, also referred to as tiered remuneration of reserves, and reserve absorption by way of open market operations.

The new approach takes into account the structural changes that have occurred in the money market since the SNB was last in a positive rate environment. It allows the SNB to keep secured short-term Swiss franc money market rates close to the SNB policy rate, while supporting interbank activity in the Swiss franc money market.

This speech sets out the reasons for adopting the new implementation approach, explains how it works and gives an overview of how it has performed so far.

Additional files

Related content

Author(s)

  • Andréa M. Maechler
    Member of the Governing Board

  • Thomas Moser
    Alternate Member of the Governing Board

Your settings

Required: These cookies (e.g. for storing your IP address) cannot be rejected as they are necessary to ensure the operation of the website. These data are not evaluated further.
Analytics: If you consent to this category, data such as IP address, location, device information, browser version and site visitor behaviour will be collected. These data are evaluated for the SNB's internal purposes and are kept for two years.
Third-party: If you consent to this category, third-party services (used, for example, to add social multimedia content to the SNB's website) will be activated which collect personal data, process these data, disclose them abroad - worldwide - and place cookies. The relevant data protection regulations are linked in the 'Privacy statement for the website of the Swiss National Bank'.

Choose your preferred settings:

This website uses cookies, analytics tools and other technologies to provide requested features, content and services, to personalise the content shown, to provide links to social media, and to analyse the use of the website in anonymised form for the purposes of improving usability. Personal data are also disclosed abroad - worldwide - to video service providers and the analytics tools of these providers are used. More information is available under 'Manage settings'.