https://www.snb.ch/en/the-snb/mandates-goals/research Swiss National Bank Working Papers present research in progress. Their aim is to elicit comments and to further debate. The opinions expressed in the working papers are those of the authors and do not necessarily reflect views held by the Swiss National Bank. Swiss National Bank Economic Studies address a range of economic and financial subjects that are related to the Swiss National Bank's tasks. The analyses and conclusions set forth are those of the authors. The fact that they are published in this series does not necessarily mean that they are endorsed by the Swiss National Bank. SNB 2026-04-17T07:15:17Z Copyright © Swiss National Bank, Zurich (Switzerland) 2026 2026-04-17T07:15:17Z https://www.snb.ch/en/srv/disclaimer https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_03 In modern economies, uniformity of money is often taken for granted. However, uniformity did not always hold in the past, and new developments - such as the decline in the use of cash for payments or the emergence of new forms of private digital money - may pose challenges. This economic note explores these challenges, draws lessons from the past, and discusses potential measures for authorities to support uniformity. https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_03 Uniformity of money - new challenges and lessons from the past 2026-04-01T22:00:00Z SNB Uniformity Singleness Money Digital money Stablecoins Central banks Regulation Trust Settlement Convertibility Cash Uniformity of money - new challenges and lessons from the past https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_03 In modern economies, uniformity of money is often taken for granted. However, uniformity did not always hold in the past, and new developments - such as the decline in the use of cash for payments or the emergence of new forms of private digital money - may pose challenges. This economic note explores these challenges, draws lessons from the past, and discusses potential measures for authorities to support uniformity. Severin Bernhard Severin Bernhard Philipp Haene Philipp Haene Severin Bernhard and Philipp Haene 2026 SNB Economic Studies 2026-03 2026-04-01T22:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_02 On 28 November 2025, the failure of a single Chicago-based data centre disrupted several global financial markets. The foreign exchange (FX) market was among those affected as its most important trading venue for futures contracts as well as a key primary venue became unavailable. The outage provided a natural experiment, shedding light on the impact of the trading halt on market functioning and the resilience of the decentralised FX market. We find that trading on secondary venues and with banks continued, demonstrating how decentralisation can enhance resilience. However, transaction costs increased considerably, mainly because FX futures prices became unavailable. This indicates that price signals from transparent venues remain essential for price discovery in the FX market. https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_02 How resilient are decentralised markets? Insights from a CME outage into FX market functioning 2026-02-22T23:00:00Z SNB Market structure Foreign exchange Decentralised markets Price discovery Market outage How resilient are decentralised markets? Insights from a CME outage into FX market functioning https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_02 On 28 November 2025, the failure of a single Chicago-based data centre disrupted several global financial markets. The foreign exchange (FX) market was among those affected as its most important trading venue for futures contracts as well as a key primary venue became unavailable. The outage provided a natural experiment, shedding light on the impact of the trading halt on market functioning and the resilience of the decentralised FX market. We find that trading on secondary venues and with banks continued, demonstrating how decentralisation can enhance resilience. However, transaction costs increased considerably, mainly because FX futures prices became unavailable. This indicates that price signals from transparent venues remain essential for price discovery in the FX market. Vincent Barthe Vincent Barthe Lukas Frei Lukas Frei Thomas Maag Thomas Maag Vincent Barthe, Lukas Frei and Thomas Maag 2026 SNB Economic Studies 2026-02 2026-02-22T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_01 This note presents the News-based Economic Outlook for Switzerland (NEOS), a timely indicator for the sentiment regarding the economic outlook based on a comprehensive sample of Swiss newspaper articles. The indicator combines machine learning methods and large language models to assess macroeconomic developments in real time. We illustrate the use of NEOS by showing how U.S. tariff announcements shifted the sentiment regarding the economic outlook in Swiss news. https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_01 NEOS - A timely indicator for economic outlook based on Swiss newspaper articles 2026-02-19T23:00:00Z SNB Sentiment analysis Economic outlook Forecasting Big data Large language models Natural language processing Neural networks NEOS - A timely indicator for economic outlook based on Swiss newspaper articles https://www.snb.ch/en/publications/research/economic-notes/2026/economic_note_2026_01 This note presents the News-based Economic Outlook for Switzerland (NEOS), a timely indicator for the sentiment regarding the economic outlook based on a comprehensive sample of Swiss newspaper articles. The indicator combines machine learning methods and large language models to assess macroeconomic developments in real time. We illustrate the use of NEOS by showing how U.S. tariff announcements shifted the sentiment regarding the economic outlook in Swiss news. Elliot Beck Elliot Beck Franziska Eckert Franziska Eckert Linus Kühne Linus Kühne Helge Liebert Helge Liebert Rina Rosenblatt-Wisch Rina Rosenblatt-Wisch Elliot Beck, Franziska Eckert, Linus Kühne, Helge Liebert and Rina Rosenblatt-Wisch 2026 SNB Economic Studies 2026-01 2026-02-19T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_04 We develop a resource-efficient methodology for measuring economic outlook in news text that combines document embeddings with synthetic training data generated by large language models. Applied to 27 million news articles, the resulting indicator significantly improves GDP growth forecast accuracy and captures sentiment shifts weeks before official releases, proving particularly valuable during crises. The indicator outperforms both survey-based benchmarks and traditional dictionary methods and is interpretable, allowing identification of specific drivers of economic sentiment. Our approach addresses key institutional constraints: it performs sentiment classification locally, enabling analyses of proprietary news content without transmission to external services while requiring minimal computational resources compared to direct large language model classification. https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_04 Measuring economic outlook in the news 2026-02-17T23:00:00Z SNB Sentiment analysis Economic outlook Forecasting Big data Large language models Natural language processing Neural networks Measuring economic outlook in the news https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_04 We develop a resource-efficient methodology for measuring economic outlook in news text that combines document embeddings with synthetic training data generated by large language models. Applied to 27 million news articles, the resulting indicator significantly improves GDP growth forecast accuracy and captures sentiment shifts weeks before official releases, proving particularly valuable during crises. The indicator outperforms both survey-based benchmarks and traditional dictionary methods and is interpretable, allowing identification of specific drivers of economic sentiment. Our approach addresses key institutional constraints: it performs sentiment classification locally, enabling analyses of proprietary news content without transmission to external services while requiring minimal computational resources compared to direct large language model classification. Elliot Beck Elliot Beck Franziska Eckert Franziska Eckert Linus Kühne Linus Kühne Helge Liebert Helge Liebert Rina Rosenblatt-Wisch Rina Rosenblatt-Wisch Elliot Beck, Franziska Eckert, Linus Kühne, Helge Liebert and Rina Rosenblatt-Wisch 2026 SNB Working Papers 2026-04 E66 C45 C55 2026-02-17T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_03 In a monetary system in which risk-free and risky money coexist, Gresham's law predicts that people will prefer to hoard risk-free money as a store of value and spend risky money as a medium of exchange. Establishing a payment system on the basis of risk-free money, such as a retail CBDC, while maintaining the fractional reserve banking system in place poses numerous challenges. In a laboratory experiment, we demonstrate that when the holding of risk-free money is unrestricted, people hold and pay with it extensively. However, when the ability to hold risk-free money is limited by a ceiling or an unattractive interest rate, people tend to hoard risk-free money and use risky money for payments. https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_03 Central Bank Digital Currency and Gresham's law: An experimental analysis 2026-01-22T23:00:00Z SNB Central Bank Digital Currency Gresham's law Laboratory experiment Central Bank Digital Currency and Gresham's law: An experimental analysis https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_03 In a monetary system in which risk-free and risky money coexist, Gresham's law predicts that people will prefer to hoard risk-free money as a store of value and spend risky money as a medium of exchange. Establishing a payment system on the basis of risk-free money, such as a retail CBDC, while maintaining the fractional reserve banking system in place poses numerous challenges. In a laboratory experiment, we demonstrate that when the holding of risk-free money is unrestricted, people hold and pay with it extensively. However, when the ability to hold risk-free money is limited by a ceiling or an unattractive interest rate, people tend to hoard risk-free money and use risky money for payments. Romain Baeriswyl Romain Baeriswyl Kene Boun My Kene Boun My Camille Cornand Camille Cornand Romain Baeriswyl, Kene Boun My and Camille Cornand 2026 SNB Working Papers 2026-03 E52 E58 2026-01-22T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_02 Rents are the largest component of the Consumer Price Index (CPI) in many countries, making accurate and timely measurements of rental price developments essential for inflation monitoring and policy decisions. Market (asking) rent indices are often available in near real-time and with high detail, but differ substantially from the rents paid by the overall tenant population, as typically measured in the CPI. This paper proposes a model to bridge the gap between asking and all-tenant rents. First, using rental-unit listings for Switzerland, we construct timely, granular, and high-frequency indices of asking rents. Second, using a probabilistic model that accounts for the duration of tenants' stays, we estimate all-tenant rents based on historical asking rents. Additionally, we incorporate rent changes during ongoing tenancies. For Switzerland, this corresponds to adjustments permitted under Swiss tenancy law in response to changes in the mortgage reference rate and inflation. This allows us to provide weekly, real-time, and highly disaggregated estimates of all-tenant rents, which are highly correlated with the official quarterly survey-based rental index in the Swiss CPI. Our approach provides a tool for timely rental price monitoring and forecasting that can be adapted for use in other countries. https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_02 From listings to all-tenant rents: A probabilistic model 2026-01-21T23:00:00Z SNB Asking rents Rent indices Duration model Shelter inflation From listings to all-tenant rents: A probabilistic model https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_02 Rents are the largest component of the Consumer Price Index (CPI) in many countries, making accurate and timely measurements of rental price developments essential for inflation monitoring and policy decisions. Market (asking) rent indices are often available in near real-time and with high detail, but differ substantially from the rents paid by the overall tenant population, as typically measured in the CPI. This paper proposes a model to bridge the gap between asking and all-tenant rents. First, using rental-unit listings for Switzerland, we construct timely, granular, and high-frequency indices of asking rents. Second, using a probabilistic model that accounts for the duration of tenants' stays, we estimate all-tenant rents based on historical asking rents. Additionally, we incorporate rent changes during ongoing tenancies. For Switzerland, this corresponds to adjustments permitted under Swiss tenancy law in response to changes in the mortgage reference rate and inflation. This allows us to provide weekly, real-time, and highly disaggregated estimates of all-tenant rents, which are highly correlated with the official quarterly survey-based rental index in the Swiss CPI. Our approach provides a tool for timely rental price monitoring and forecasting that can be adapted for use in other countries. Emanuel Nussli Emanuel Nussli Rachel Arulraj-Cordonier Rachel Arulraj-Cordonier Flurina Strasser Flurina Strasser Marko Nanut Petrič Marko Nanut Petrič Morten Bech Morten Bech Antonio Pipino Antonio Pipino Emanuel Nussli, Rachel Arulraj-Cordonier, Flurina Strasser, Marko Nanut Petrič, Morten Bech and Antonio Pipino 2026 SNB Working Papers 2026-02 R31 E31 E37 2026-01-21T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_01 We present novel evidence on the global transmission of monetary policy (MP) surprises via bond funds. Using daily MP surprise measures and a multi-country panel of weekly fund flows, we document that bond fund flows respond systematically to MP surprises. The direction, intensity, and persistence of these responses, however, vary across destination countries, fund investment strategies, and fund domiciles. Furthermore, bond fund flows react not only to domestic MP surprises, but also to foreign MP surprises, indicating cross-border spillovers. We explore two mechanisms driving these responses: the relative importance of MP shocks versus information shocks, and the impact of exchange rate movements on portfolio rebalancing. Our findings highlight the role of nonbank financial intermediaries in global MP transmission. https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_01 Heterogeneous effects of monetary policy surprises on bond fund flows 2026-01-12T23:00:00Z SNB NBFIs Bond funds Monetary policy surprises Cross-border spillovers Heterogeneous effects of monetary policy surprises on bond fund flows https://www.snb.ch/en/publications/research/working-papers/2026/working_paper_2026_01 We present novel evidence on the global transmission of monetary policy (MP) surprises via bond funds. Using daily MP surprise measures and a multi-country panel of weekly fund flows, we document that bond fund flows respond systematically to MP surprises. The direction, intensity, and persistence of these responses, however, vary across destination countries, fund investment strategies, and fund domiciles. Furthermore, bond fund flows react not only to domestic MP surprises, but also to foreign MP surprises, indicating cross-border spillovers. We explore two mechanisms driving these responses: the relative importance of MP shocks versus information shocks, and the impact of exchange rate movements on portfolio rebalancing. Our findings highlight the role of nonbank financial intermediaries in global MP transmission. Sébastien Blanco Sébastien Blanco Miriam Koomen Miriam Koomen Pinar Yesin Pinar Yesin Sébastien Blanco, Miriam Koomen and Pinar Yesin 2026 SNB Working Papers 2026-01 G23 E52 E44 2026-01-12T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_14 The SNB implements its monetary policy by using several instruments, including repurchase agreement (repo) transactions. The SNB conducted test repo transactions involving tokenised assets and wholesale central bank digital currency. These so-called digital repos were settled on a distributed ledger technology (DLT) infrastructure. The tests revealed that settlement of repos on a DLT-based infrastructure is feasible, and provided insights into the corresponding challenges. Specifically, integrating a DLT-based infrastructure into today's money market as in the test setup presents challenges related to market fragmentation, the need for enhanced collateral management capabilities, and the harmonisation of communication standards. https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_14 How can repurchase agreements be settled on a distributed ledger? Insights from the Helvetia pilot 2025-12-17T23:00:00Z SNB Swiss National Bank Repo market Distributed ledger technology Tokenised assets Wholesale central bank digital currency How can repurchase agreements be settled on a distributed ledger? Insights from the Helvetia pilot https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_14 The SNB implements its monetary policy by using several instruments, including repurchase agreement (repo) transactions. The SNB conducted test repo transactions involving tokenised assets and wholesale central bank digital currency. These so-called digital repos were settled on a distributed ledger technology (DLT) infrastructure. The tests revealed that settlement of repos on a DLT-based infrastructure is feasible, and provided insights into the corresponding challenges. Specifically, integrating a DLT-based infrastructure into today's money market as in the test setup presents challenges related to market fragmentation, the need for enhanced collateral management capabilities, and the harmonisation of communication standards. Florian Böser Florian Böser Rebecca Gerosa Rebecca Gerosa Florian Böser and Rebecca Gerosa 2025 SNB Economic Studies 2025-14 2025-12-17T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_18 In this paper, we analyze the effects of the introduction of the liquidity coverage ratio (LCR) on banks' funding behavior. We use changes in regulatory liquidity requirements in Switzerland as a natural experiment. Using data for the period before and after the LCR was applied for all banks in Switzerland, our dataset allows us to analyze how the introduction of the LCR affects the banks' funding structure. Our results show that the LCR had its intended effects as banks reduced their exposure to short-term funding. At the same time, we find evidence for optimization of the LCR by banks. Banks optimize their LCR by extending the maturities of liabilities slightly over 30 days, which leads to an improvement in the LCR by 10 percentage points on average. Our results imply that it makes sense to complement the 30-day LCR with longer-term liquidity requirements to reduce cliff risks. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_18 LCR optimization by banks: Evidence from changes in liquidity requirements in Switzerland 2025-12-17T23:00:00Z SNB Regulatory arbitrage Liquidity regulation Contractual maturity mismatches Funding structure LCR optimization by banks: Evidence from changes in liquidity requirements in Switzerland https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_18 In this paper, we analyze the effects of the introduction of the liquidity coverage ratio (LCR) on banks' funding behavior. We use changes in regulatory liquidity requirements in Switzerland as a natural experiment. Using data for the period before and after the LCR was applied for all banks in Switzerland, our dataset allows us to analyze how the introduction of the LCR affects the banks' funding structure. Our results show that the LCR had its intended effects as banks reduced their exposure to short-term funding. At the same time, we find evidence for optimization of the LCR by banks. Banks optimize their LCR by extending the maturities of liabilities slightly over 30 days, which leads to an improvement in the LCR by 10 percentage points on average. Our results imply that it makes sense to complement the 30-day LCR with longer-term liquidity requirements to reduce cliff risks. Marc Blatter Marc Blatter Joséphine Molleyres Joséphine Molleyres Marc Blatter and Joséphine Molleyres 2025 SNB Working Papers 2025-18 G21 G28 2025-12-17T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_17 This paper investigates the interaction between the rise of inelastic intermediaries, e.g. mutual funds and exchange traded funds (ETFs), and exchange rate dynamics. By leveraging regulatory microdata on the universe of mutual funds domiciled in Switzerland, we first document the remarkable rise of the market share of this industry. Mutual funds went from holding 5% of domestic currency fixed income instruments in 2005 to 51% in 2024. We show that these intermediaries have strict mandates and trade only when faced with in(out)-flows. This makes the market more price-inelastic on aggregate in response to asset demand shocks. We develop an analytical model that we bring to the microdata. We find that (i) an inflow into domestic mutual funds with a large portfolio weight on the domestic currency appreciates it and (ii) the reduced aggregate elasticity makes the exchange rate more sensitive to capital flows. Finally, using a weekly panel of five advanced economies, we document the external validity of this mechanism. We show that the currencies whose markets see a higher prevalence of inelastic intermediaries react significantly more strongly to capital inflows. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_17 The rise of inelastic intermediaries and exchange rate dynamics 2025-12-16T23:00:00Z SNB Inelastic intermediaries Mutual funds Exchange rate dynamics Capital flows The rise of inelastic intermediaries and exchange rate dynamics https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_17 This paper investigates the interaction between the rise of inelastic intermediaries, e.g. mutual funds and exchange traded funds (ETFs), and exchange rate dynamics. By leveraging regulatory microdata on the universe of mutual funds domiciled in Switzerland, we first document the remarkable rise of the market share of this industry. Mutual funds went from holding 5% of domestic currency fixed income instruments in 2005 to 51% in 2024. We show that these intermediaries have strict mandates and trade only when faced with in(out)-flows. This makes the market more price-inelastic on aggregate in response to asset demand shocks. We develop an analytical model that we bring to the microdata. We find that (i) an inflow into domestic mutual funds with a large portfolio weight on the domestic currency appreciates it and (ii) the reduced aggregate elasticity makes the exchange rate more sensitive to capital flows. Finally, using a weekly panel of five advanced economies, we document the external validity of this mechanism. We show that the currencies whose markets see a higher prevalence of inelastic intermediaries react significantly more strongly to capital inflows. Johannes Eugster Johannes Eugster Giovanni Rosso Giovanni Rosso Pinar Yesin Pinar Yesin Johannes Eugster, Giovanni Rosso and Pinar Yesin 2025 SNB Working Papers 2025-17 F31 G23 G15 F21 E44 2025-12-16T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_13 The Swiss credit market environment has changed significantly since 2022. Interest rates have risen for the first time in 15 years, UBS has acquired Credit Suisse, and regulatory requirements have been tightened. The latter includes the introduction of the "Basel III Final" banking regulation and more stringent liquidity requirements for systemically important banks. Despite these changes, credit volumes have increased robustly in Switzerland, and bank lending has adjusted to both the tightening and subsequent loosening of monetary policy, as expected. https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_13 Robust bank lending in a changing credit market environment 2025-11-12T23:00:00Z SNB Bank lending Regulatory requirements Banks' funding costs Robust bank lending in a changing credit market environment https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_13 The Swiss credit market environment has changed significantly since 2022. Interest rates have risen for the first time in 15 years, UBS has acquired Credit Suisse, and regulatory requirements have been tightened. The latter includes the introduction of the "Basel III Final" banking regulation and more stringent liquidity requirements for systemically important banks. Despite these changes, credit volumes have increased robustly in Switzerland, and bank lending has adjusted to both the tightening and subsequent loosening of monetary policy, as expected. Romain Baeriswyl Romain Baeriswyl Andreas Freitag Andreas Freitag Maja Ganarin Maja Ganarin Romain Baeriswyl, Andreas Freitag and Maja Ganarin 2025 SNB Economic Studies 2025-13 2025-11-12T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_12 Indicators based on money in the hands of the public have fallen somewhat out of fashion for monetary policy analysis. The reason is the instability of money demand that was observed in many advanced economies in the 1990s and 2000s. In this note, I show that a careful assessment of monetary developments can still be informative about potential medium-term inflationary pressures in Switzerland. https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_12 Is the quantity of money informative for future inflation? The Swiss case 2025-11-02T23:00:00Z SNB Money Inflation Monetary policy Is the quantity of money informative for future inflation? The Swiss case https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_12 Indicators based on money in the hands of the public have fallen somewhat out of fashion for monetary policy analysis. The reason is the instability of money demand that was observed in many advanced economies in the 1990s and 2000s. In this note, I show that a careful assessment of monetary developments can still be informative about potential medium-term inflationary pressures in Switzerland. Samuel Reynard Samuel Reynard Samuel Reynard 2025 SNB Economic Studies 2025-12 2025-11-02T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_11 Uniformity of money is a topic that has gained increasing attention with the emergence of new forms of digital money. It describes the principle that different forms of money in the same currency are used and traded at par, i.e., at the same value. This economic note shows why uniformity of money is important for central banks and what factors underpin it. The note outlines measures to support these factors and finishes by introducing a layered perspective on the concept of uniformity of money. https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_11 Exploring the concept of uniformity of money 2025-10-29T23:00:00Z SNB Uniformity Singleness Money Digital money Stablecoins Central banks Regulation Trust Settlement Convertibility Exploring the concept of uniformity of money https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_11 Uniformity of money is a topic that has gained increasing attention with the emergence of new forms of digital money. It describes the principle that different forms of money in the same currency are used and traded at par, i.e., at the same value. This economic note shows why uniformity of money is important for central banks and what factors underpin it. The note outlines measures to support these factors and finishes by introducing a layered perspective on the concept of uniformity of money. Severin Bernhard Severin Bernhard Philipp Haene Philipp Haene Severin Bernhard and Philipp Haene 2025 SNB Economic Studies 2025-11 2025-10-29T23:00:00Z en https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_10 Inflation in Switzerland has been low over the past 20 years, both from an international and a historical perspective. One hypothesis is that this is due to the high share of 'administered' - or regulated - prices in the Swiss consumer price basket. We show that this hypothesis is not supported by the data. Inflation for products with administered prices was typically lower than inflation for other products and thus tended to dampen inflation overall. However, the effect was limited. Swiss inflation and the Swiss inflation gap with the euro area were determined mainly by the evolution of non-administered prices. https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_10 How large is the impact of administered prices on inflation in Switzerland? 2025-10-26T23:00:00Z SNB Inflation Switzerland Consumer prices Consumption basket Administered prices How large is the impact of administered prices on inflation in Switzerland? https://www.snb.ch/en/publications/research/economic-notes/2025/economic_note_2025_10 Inflation in Switzerland has been low over the past 20 years, both from an international and a historical perspective. One hypothesis is that this is due to the high share of 'administered' - or regulated - prices in the Swiss consumer price basket. We show that this hypothesis is not supported by the data. Inflation for products with administered prices was typically lower than inflation for other products and thus tended to dampen inflation overall. However, the effect was limited. Swiss inflation and the Swiss inflation gap with the euro area were determined mainly by the evolution of non-administered prices. Simone Auer Simone Auer Simon Beyeler Simon Beyeler Jonas Meier Jonas Meier Simone Auer, Simon Beyeler and Jonas Meier 2025 SNB Economic Studies 2025-10 2025-10-26T23:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_16 Modelling business cycle fluctuations and the nonneutrality of money is an ongoing challenge for macroeconomists. While the imperfect-information hypothesis developed by Phelps and Lucas in the 1970s had been abandoned in favour of the sticky-price hypothesis, a recent trend in the literature has put the imperfect-information hypothesis back on the agenda to explain business fluctuations and monetary nonneutrality. The success of this revival lies in the introduction of strategic uncertainty into a framework of heterogeneous information. The present paper presents this macroeconomic framework and provides a brief overview of recent advances in the literature. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_16 Business cycle fluctuations and monetary policy under heterogeneous information: A literature review 2025-10-22T22:00:00Z SNB Heterogeneous information Strategic complementarities Higher-order beliefs Coordination Beauty-contest Monetary nonneutrality Business cycle Communication policy Monetary policy Business cycle fluctuations and monetary policy under heterogeneous information: A literature review https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_16 Modelling business cycle fluctuations and the nonneutrality of money is an ongoing challenge for macroeconomists. While the imperfect-information hypothesis developed by Phelps and Lucas in the 1970s had been abandoned in favour of the sticky-price hypothesis, a recent trend in the literature has put the imperfect-information hypothesis back on the agenda to explain business fluctuations and monetary nonneutrality. The success of this revival lies in the introduction of strategic uncertainty into a framework of heterogeneous information. The present paper presents this macroeconomic framework and provides a brief overview of recent advances in the literature. Romain Baeriswyl Romain Baeriswyl Pierrick Clerc Pierrick Clerc Camille Cornand Camille Cornand Romain Baeriswyl, Pierrick Clerc and Camille Cornand 2025 SNB Working Papers 2025-16 C72 D83 E12 E32 E52 2025-10-22T22:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_15 Cross-border payments remain expensive, slow, and opaque due to reliance on correspondent banking. Distributed ledger technology (DLT) offers a possible alternative, enabling peer-to-peer transactions at lower cost with greater speed, transparency, and resilience. However, DLT systems largely rely on the public Internet, which exposes them to network-based outages and attacks. SCION, a secure next-generation Internet architecture, can operate side-by-side with today's Internet to mitigate network-related risks. In addition to the security benefits, SCION also provides a novel approach to enforce regulatory compliance on a permissionless DLT with a governance model well-suited for multi-jurisdictional platforms. We present the first practical blueprint for deploying a DLT-based settlement system on SCION and demonstrate, through a simulation-based analysis of the real-world DLT system Sui, that SCION can mitigate more than half of routing-based network attacks, even when only partially adopted by DLT validators. Overall, SCION can provide a robust infrastructure foundation for DLT-based cross-border payment systems by enhancing their security, reliability, and regulatory compliance. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_15 SCION and cross-border payments: Enhancing security and compliance in distributed ledger networks 2025-10-02T22:00:00Z SNB DLT reliability DLT availability Network attacks Routing attacks DDoS SCION and cross-border payments: Enhancing security and compliance in distributed ledger networks https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_15 Cross-border payments remain expensive, slow, and opaque due to reliance on correspondent banking. Distributed ledger technology (DLT) offers a possible alternative, enabling peer-to-peer transactions at lower cost with greater speed, transparency, and resilience. However, DLT systems largely rely on the public Internet, which exposes them to network-based outages and attacks. SCION, a secure next-generation Internet architecture, can operate side-by-side with today's Internet to mitigate network-related risks. In addition to the security benefits, SCION also provides a novel approach to enforce regulatory compliance on a permissionless DLT with a governance model well-suited for multi-jurisdictional platforms. We present the first practical blueprint for deploying a DLT-based settlement system on SCION and demonstrate, through a simulation-based analysis of the real-world DLT system Sui, that SCION can mitigate more than half of routing-based network attacks, even when only partially adopted by DLT validators. Overall, SCION can provide a robust infrastructure foundation for DLT-based cross-border payment systems by enhancing their security, reliability, and regulatory compliance. Grace Cimaszewski Grace Cimaszewski Francesco Da Dalt Francesco Da Dalt Thomas Moser Thomas Moser Adrian Perrig Adrian Perrig Grace Cimaszewski, Francesco Da Dalt, Thomas Moser and Adrian Perrig 2025 SNB Working Papers 2025-15 E42 F33 G21 2025-10-02T22:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_14 As modern economies increasingly adopt digital and instant payments, ensuring the resilience of payment systems and maintaining public trust have become more critical. This paper extends the network and clustering approach of Glowka et al. (2025) to identify critical participants in real-time gross settlement (RTGS) systems - those whose failure could disrupt system continuity. Our extension incorporates three key dimensions: payment type (interbank vs. customer), intrayear temporal frequency, and transaction view (value vs. volume). With these dimensions, we derive an extensive set of granular criticality scenarios and weight each scenario result by its economic activity to reflect its operational relevance. Applying this method to transaction data from SIC, Switzerland's RTGS system, we find that, beyond large international banks, mid-sized domestic banks and, occasionally, financial market infrastructures also play critical roles, especially during periods of heightened economic activity and night-time settlement hours. These criticality results are consistent, although some participants feature more prominently in the volume-based view. Our findings provide system operators and regulators with complementary tools to meet the Principles for Financial Market Infrastructures (PFMI), enabling context-specific assessment of criticality in RTGS systems and informing realistic stress test scenarios amid a rapidly evolving payment landscape. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_14 Beyond interbank: Identifying critical participants in integrated RTGS systems using payment type and temporal dynamics 2025-09-18T22:00:00Z SNB Payment system Systemic risk Settlement Central bank Customer payments Beyond interbank: Identifying critical participants in integrated RTGS systems using payment type and temporal dynamics https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_14 As modern economies increasingly adopt digital and instant payments, ensuring the resilience of payment systems and maintaining public trust have become more critical. This paper extends the network and clustering approach of Glowka et al. (2025) to identify critical participants in real-time gross settlement (RTGS) systems - those whose failure could disrupt system continuity. Our extension incorporates three key dimensions: payment type (interbank vs. customer), intrayear temporal frequency, and transaction view (value vs. volume). With these dimensions, we derive an extensive set of granular criticality scenarios and weight each scenario result by its economic activity to reflect its operational relevance. Applying this method to transaction data from SIC, Switzerland's RTGS system, we find that, beyond large international banks, mid-sized domestic banks and, occasionally, financial market infrastructures also play critical roles, especially during periods of heightened economic activity and night-time settlement hours. These criticality results are consistent, although some participants feature more prominently in the volume-based view. Our findings provide system operators and regulators with complementary tools to meet the Principles for Financial Market Infrastructures (PFMI), enabling context-specific assessment of criticality in RTGS systems and informing realistic stress test scenarios amid a rapidly evolving payment landscape. Julius Mattern Julius Mattern Christoph Meyer Christoph Meyer Julius Mattern and Christoph Meyer 2025 SNB Working Papers 2025-14 E42 D62 E44 E58 G21 J33 2025-09-18T22:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_13 This paper evaluates whether CO2 emission levels or emission intensities are firm characteristics that drive Swiss firms’ stock returns. We show that standard characteristics such as size and the book-to-market equity ratio are more important determinants of firm-level stock returns than are CO2 levels (intensities). Brown firms (high CO2 levels or intensities) tend to be large and exhibit low book-to-market equity ratios, whereas their green counterparts are small and exhibit high book-to-market equity ratios. This explains why return differences between brown and green firms are statistically indistinguishable from zero after controlling for exposures to standard risk factors. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_13 On the carbon premium in Swiss stock returns 2025-09-04T22:00:00Z SNB Climate change CO2 emissions Event study Risk premium On the carbon premium in Swiss stock returns https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_13 This paper evaluates whether CO2 emission levels or emission intensities are firm characteristics that drive Swiss firms’ stock returns. We show that standard characteristics such as size and the book-to-market equity ratio are more important determinants of firm-level stock returns than are CO2 levels (intensities). Brown firms (high CO2 levels or intensities) tend to be large and exhibit low book-to-market equity ratios, whereas their green counterparts are small and exhibit high book-to-market equity ratios. This explains why return differences between brown and green firms are statistically indistinguishable from zero after controlling for exposures to standard risk factors. Jonas Heim Jonas Heim Thomas Nitschka Thomas Nitschka Jonas Heim and Thomas Nitschka 2025 SNB Working Papers 2025-13 G12 Q54 2025-09-04T22:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_12 We estimate the slope of the Phillips curve in the euro area, allowing for nonlinearities - or kinks - in the relationship between labor market slack and inflation. We exploit cross-country variation in labor market conditions in the period 2001-2024, absorbing aggregate shocks and endogenous monetary policy reactions with time fixed effects. We find that while the Phillips curve is usually quite flat, it becomes at least three times as steep if the labor market is sufficiently tight. This kink is more pronounced in the euro area than in the United States, potentially because of more rigid labor markets. Our estimates imply, however, that despite this nonlinearity, the majority of the post-Covid inflation surge was due to factors other than tight labor markets. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_12 Kinky Europe: Evidence from the regional Phillips curve in the euro area 2025-08-26T22:00:00Z SNB Phillips curve Inflation Nonlinearities Kinky Europe: Evidence from the regional Phillips curve in the euro area https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_12 We estimate the slope of the Phillips curve in the euro area, allowing for nonlinearities - or kinks - in the relationship between labor market slack and inflation. We exploit cross-country variation in labor market conditions in the period 2001-2024, absorbing aggregate shocks and endogenous monetary policy reactions with time fixed effects. We find that while the Phillips curve is usually quite flat, it becomes at least three times as steep if the labor market is sufficiently tight. This kink is more pronounced in the euro area than in the United States, potentially because of more rigid labor markets. Our estimates imply, however, that despite this nonlinearity, the majority of the post-Covid inflation surge was due to factors other than tight labor markets. Marius Faber Marius Faber Gabriel Züllig Gabriel Züllig Marius Faber and Gabriel Züllig 2025 SNB Working Papers 2025-12 E30 2025-08-26T22:00:00Z en https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_11 We enhance sentiment analysis in the foreign exchange (FX) market by fine-tuning large language models (LLMs) to better understand and interpret the complex language specific to FX markets. We build on existing methods by using state-of-the-art open source LLMs, fine-tuning them with labelled FX news articles and then comparing their performance against traditional approaches and alternative models. Furthermore, we tested these fine-tuned LLMs by creating investment strategies based on the sentiment they detect in FX analysis articles with the goal of demonstrating how well these strategies perform in real-world trading scenarios. Our findings indicate that the fine-tuned LLMs outperform the existing methods in terms of both the classification accuracy and trading performance, highlighting their potential for improving FX market sentiment analysis and investment decision-making. https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_11 FX sentiment analysis with large language models 2025-08-25T22:00:00Z SNB Large language models Sentiment analysis Fine-tuning Text classification Natural language processing Foreign exchange Financial markets FX sentiment analysis with large language models https://www.snb.ch/en/publications/research/working-papers/2025/working_paper_2025_11 We enhance sentiment analysis in the foreign exchange (FX) market by fine-tuning large language models (LLMs) to better understand and interpret the complex language specific to FX markets. We build on existing methods by using state-of-the-art open source LLMs, fine-tuning them with labelled FX news articles and then comparing their performance against traditional approaches and alternative models. Furthermore, we tested these fine-tuned LLMs by creating investment strategies based on the sentiment they detect in FX analysis articles with the goal of demonstrating how well these strategies perform in real-world trading scenarios. Our findings indicate that the fine-tuned LLMs outperform the existing methods in terms of both the classification accuracy and trading performance, highlighting their potential for improving FX market sentiment analysis and investment decision-making. Daniele Ballinari Daniele Ballinari Jessica Maly Jessica Maly Daniele Ballinari and Jessica Maly 2025 SNB Working Papers 2025-11 F31 G12 G15 2025-08-25T22:00:00Z en