Switzerland brings in negative interest rates to keep Swiss franc weaker as Russia mayhem prompts

UK Daily Mail ^ | December 18, 2014 | Tanya Jefferies

[C19fan]

The Swiss central bank plans to charge depositors a 'negative' interest rate of -0.25 per cent to discourage spooked investors from using it to shelter their cash. Money has flooded into Switzerland as market turbulence caused by the Russian rouble collapse and oil price slide has prompted a desperate search for safe havens in recent days. The Swiss National Bank said it would slash its interest rate on balances of over 10million Swiss francs from January 22 - effectively imposing a charge on depositors wanting to hold francs in a bid to keep its currency artificially weak against the euro.

[C19fan]

Starting with the Euro crisis the Swiss have been maintaining a fixed exchange rate against the Euro. The Swiss are trying to prevent an increase in the Swiss Franc supply, preventing inflation, as another wave of hot money flows into Switzerland.

[Yo-Yo]

Judging by how fast the Ruble is dropping, I doubt that a 0.25% loss would be a disincentive.

[Grampa Dave]

Good.

More Russian people with transferable cash assets will be buying more American dividend paying stocks/ETS and bonds.

There was a picture this morning in our small local fish wrap showing Russians in panic buying modes trying to buy big cost items before their Rubles went down even more.

[kidd]

Its 1930 all over again.

Deflation. High real unemployment. Numerous cells of military tension all around the world. Inept American leadership. Socialism on the rise.

[I want the USA back]

Calling it a negative interest rate might fool a few million Americans, but I doubt it will fool any Swiss. It’s confiscation pure and simple.

[expat2]

The Swiss are going to have to make a decision soon on whether to untie their Franc from the Euro or to continue creating and selling more Francs and buying Euros.

[AU72]

That’s when keeping your money under the mattress yields a better return.

[Army Air Corps]

Ping.

[Army Air Corps]

Ping.

[Bogey78O]

Only if you have Swiss Francs. If you have Rubles it’s a hell of a deal.

[SAJ]

Regarding Switzerland, what the devil did YOU expect? Swiss are for Swiss; they have never failed to act in their own interest in times of potential crisis...and usually swiftly.

You should look up SNB activities from 1971 to 1975, during and after the crises that accrued after Nixon shut the gold window in 1971. This is just a lower-case replay, more or less.

Matter of fact, SNB activities were at the heart of Paul Erdman's old novel of the same period: The Billion Dollar Sure Thing. Worth a read, even today.

[Organic Panic]

Germany is doing the same. This is an ominous sign.