[ZURICH] The amount of cash commercial banks hold with the Swiss National Bank (SNB) jumped last week, data showed on Monday, indicating the central bank may have intervened to defend its cap on the franc before abruptly scrapping the currency ceiling.
Switzerland's central bank shocked financial markets on Thursday by scrapping a three-year-old cap on the franc, sending the currency soaring against the euro.
Sight deposits, the accounts used to provide commercial banks with cash, rose by 10.6 billion francs last week to 339.6 billion francs, SNB data showed. That was the biggest weekly jump since the end of December, which itself was the largest increase since July 2013.
Sight deposits can be an indication of how inclined banks are to find an ultra-safe home for their money. The increase last week may also reflect previous efforts by the SNB to defend the 1.20 per euro cap.
The SNB can expand sight deposits through foreign exchange swaps and repurchases of its own debt.
A spokeswoman for the SNB declined to comment on the rise.
The cap was imposed on Sept 6, 2011 on the soaring safe-haven Swiss franc to fend off the risk of deflation and recession in Switzerland.
In August 2011, the SNB had flooded the money market with cash as part of its efforts to weaken the franc, raising total sight deposits to 200 billion francs, before capping the currency.
Sight deposits constitute a large part of the liquidity in the banking system.