Finances AbroadMaking the complicated simple!

Switzerland, the world’s safe haven, will bring in a negative interest rate in an attempt to cut the value of large sums of money left in the country.

Switzerland’s National Bank (SNB) is imposing a rate of minus 0.25% on “sight deposits” – a form of instant access account which contains more than 10m Swiss francs ($9.77m).

The uncertainty in the markets due to the dramatic dip in oil prices and the Russian Rouble meltdown has led many investors to seek “safe havens”.

It is necessary to now attempt to lower the value of the Swiss Franc which has risen recently. Otherwise, Swiss exports will become too pricey, having a negative effect on foreign trade.

The announcement sent the franc lower, and in early trading the euro was buying 1.201 Swiss francs, fewer than the 1.203 it was worth before the news, just within the target.

A negative rate means depositors pay to lend the bank their money, and they will think twice if they know they have to burden the cost.

The new rate will be introduced on 22 January and will only affect banks and large companies who use the "sight account" to transfer funds quickly and without restrictions.

 

Eurozone, Interest Rates, Offshore Savings, World Economy

By admin

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