The Swiss National Bank’s negative interest rates, introduced five years ago,are having an increasingly significant economic and social impact. But despite criticism, theSNBdoes not want toremove them. It considers the measure necessary tostop the Swiss francappreciating too much.
This content was published on
5 minutes
- More from this author
-
Deutsch
de
Wer bei den Negativzinsen gewinnt – und wer verliert
Read more: Wer bei den Negativzinsen gewinnt – und wer verliert
-
Français
fr
Qui gagne et qui perd avec les taux d’intérêt négatifs?
Read more: Qui gagne et qui perd avec les taux d’intérêt négatifs?
-
Italiano
it
Chi vince e chi perde con i tassi d’interesse negativi Original
Read more: Chi vince e chi perde con i tassi d’interesse negativi
-
Español
es
Quién gana y quién pierde con las tasas de interés negativas
Read more: Quién gana y quién pierde con las tasas de interés negativas
-
Português
pt
Quem ganha e quem perde com os juros negativos
Read more: Quem ganha e quem perde com os juros negativos
-
العربية
ar
الرابحون والخاسرون من قرار فَرض الفائدة السلبية
Read more: الرابحون والخاسرون من قرار فَرض الفائدة السلبية
-
中文
zh
瑞士实行负利率谁吃亏，谁受益？
Read more: 瑞士实行负利率谁吃亏，谁受益？
-
Русский
ru
Отрицательный процент: кто в Швейцарии выигрывает от него, и кто проигрывает?
Read more: Отрицательный процент: кто в Швейцарии выигрывает от него, и кто проигрывает?
Following the financial crisis of 2008, manycentralbanks took an unprecedented series of measures to keep the banking sector afloat and to avert a possible economic depression. These included historic interest rate cuts. In the United States and theeurozone,interest rates fell to almost zero a few years ago.
Because the Swiss franc is regularly used as a safehaven currency in times of crisis, the SNB was forced to go below zero. Five years ago, the SNB lowered its key interest rate to -0.75% in order to avoid a further appreciation of the Swiss franc.
The primary purpose of low or negative interest rates is to encourage banks and other investors to invest their available capital in the economy rather than parking it with central banks. At the same time, because the cost of money is low, companies can borrow from banks to finance new projectsmore easily.
In the case of the SNB, the main purpose of negative interest rates is to make the franc less attractive. The SNBhasalso used its currency reserves, which total CHF800 billion($815 billion), to intervene in the foreign exchange market with the same objective.
Businesses: Because negative interest rates keep the value of the Swiss franc within limits, they benefit primarily the export industry and the tourism sector. Companies active in the domestic market also benefit from low interest rates as they can get cheap loans.
TheState: With a total debt of almost CHF200 billion, thegovernment, cantons and municipalities have largely benefited from the low cost of money. Low interest rateshavehelped thegovernmentgenerate billions in surpluses over thepast decade, whichcan be used to reduce debt.Healthypublic financeshavealso benefited taxpayersto some extent.
External Content
Property owners: Because mortgage interest rates havebeen atunprecedentedly lowlevels for several years, property owners also benefit from negative interest rates. At the same time, the prices of houses and apartments in many regions of Switzerland have practically doubled within a decade.
Banks: Financial institutions had to spend aroundCHF2 billionin 2019 to pay the negative interest on the money they deposit with the SNB. Seeing their margins reduced, some banks also began to charge negative interest on their own customers’accounts. So far, however, this practice has appliedonlyto assets over CHF100,000. Banks have also compensated for the losses bycharging clients moreaccount management fees.
More
More
Swiss National Bank expects profit of CHF49 billion for 2019
This content was published on The Swiss National Bank (SNB) expects to post an annual profit of CHF49 billion ($50.29 billion) for 2019.
Read more: Swiss National Bank expects profit of CHF49 billion for 2019Savers: For some years now, savings have been earning interest at rates just above zero. At the beginning of the 1990s, people who had CHF10,000 in a bank account still received up to CHF500 in interest per year. Today, at best, one has to be content with a few dozen francs, which are often used up again by the costs of keeping the account.
Pension funds:Until about ten years ago, pension funds were able to pay substantial interest to theirpolicyholders, thereby making a significant contribution to the growth of their old-age assets. This is no longer the case. Obliged to deposit at least part of their funds in secure investments such as bonds, pension funds now earn much lower incomes, which are only partially offset by investments in shares and real estate. Banks have also started to apply negative rates on funds deposited by pension funds. The state pension scheme also faces similar problems, although to a lesser extent.
The SNB still sees no alternative. It is obliged to adapt to the monetary policy pursued by other central banks, starting with the European Central Bank. The situation in the eurozone remains rather fragile and uncertain. Last autumn, a number of major central banks eased their monetary policy, signalling that they were likely to leave their reference rates at a low level for a prolonged period.
In recent years, the SNB has faced severe criticism with regard to negative interest rates. The unions are urgingthe bankto use part of its profits for thestate pension schemeand pension funds, which have been penalised by the negative interest rate strategy. SNB President Thomas Jordan says the task of the central bank is not to pursue a social policy but to pursue the general interest of the country. In recent years, the Swisseconomy hasgrown slightly comparedwithmany other European countries, while unemployment hadfallen to 2.3% at the end of 2019.
More
Workplace Switzerland
Meet the foreigners who make up a quarter of the Swiss population
Read more: Meet the foreigners who make up a quarter of the Swiss population
More
Foreign affairs
Russian investigation confirms Putin’s son was born inSwitzerland
Read more: Russian investigation confirms Putin’s son was born inSwitzerland
More
Multinational companies
The mystery of Switzerland’s surging imports of Uzbek and Kazakh gold
Read more: The mystery of Switzerland’s surging imports of Uzbek and Kazakh gold
More
Culture
Swiss film exposes xenophobia as weapon against the working class
Read more: Swiss film exposes xenophobia as weapon against the working class
More
Swiss Abroad
Feline felons: what to do with Switzerland’s killer cats?
Read more: Feline felons: what to do with Switzerland’s killer cats?More
Debate
Hosted by: Benjamin von Wyl
What could Switzerland and the United States learn from each other today?
What could the two democracies learn from each other?
Join the discussion
3
Comments
More
Debate
Hosted by: Giannis Mavris
What is the future of Swiss neutrality?
Is Swiss neutrality misunderstood? Or has the Swiss model of neutrality now become obsolete?
Join the discussion
2
Likes
2
Comments
More
Debate
Hosted by: Katy Romy
What can be done to protect biodiversity in your country?
Swiss voters are set to decide on a people’s initiative calling for better protection of ecosystems in the country. Have your say on the September 22 vote.
Join the discussion
46
Likes
42
Comments
In compliance with the JTI standards
More: SWI swissinfo.ch certified by the Journalism Trust Initiative
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Bank savers feel sting from negative interest rates
This content was published on The number of Swiss bank customers being charged negative interest rates on their deposits is on the rise – and shows no sign of reversing.
Read more: Bank savers feel sting from negative interest rates
More
How pension payments are making Swiss housing unaffordable
This content was published on Under pressure to invest, Swiss pension funds plough money into real estate. But renters are now fighting back with direct democracy.
Read more: How pension payments are making Swiss housing unaffordable
More
Negative interest rates ‘harm Swiss economy’
This content was published on Switzerland’s largest bank, UBS, asked 2,500 companies about the impact of negative interest rates. “Nearly two-thirds of respondents said that the cost…for the economy outweighed their benefits overall,” UBS said in a press releaseExternal link on Thursday. The findings heap more pressure on the Swiss National Bank (SNB), which continues to defend its actions. However,…
Read more: Negative interest rates ‘harm Swiss economy’
More
Negative interest rates have cost Swiss banks CHF8 billion
This content was published on Swiss banks have been forced to fork out CHF8 billion in negative interest fees since the Swiss National Bank (SNB) imposed its policy in 2015.
Read more: Negative interest rates have cost Swiss banks CHF8 billion
More
Credit Suisse to charge wealthy clients negative interest rates
This content was published on From November 15, corporate clients will be charged -0.85% interest on cash holdings above CHF10 million ($10 million), Credit Suisse confirmed on Friday. Individuals will face -0.75% rates on savings accounts above CHF2 million, starting from January 1, 2020. “In line with the approach that has long been followed by other banks, Credit Suisse is…
Read more: Credit Suisse to charge wealthy clients negative interest rates
More
UBS plans negative interest rate for rich clients
This content was published on UBS plans to levy a negative interest rate on wealthy clients who deposit more than CHF 2 million with its Swiss bank.
Read more: UBS plans negative interest rate for rich clients
More
Bank lobby group demands end to negative interest rates
This content was published on SBAExternal link Chairman Herbert Scheidt said on Thursday that a normalisation of interest rates “appears a long way off”. “Unfortunately, the societal, structural and long-term damages will become even greater the longer we find ourselves in this ‘lower forever’ environment,” he told the media. Banks are suffering from having to pay for the privilege of…
Read more: Bank lobby group demands end to negative interest rates