Swiss sight deposits rise further after SNB abandons franc cap

[ZURICH] The amount of cash commercial banks hold with the Swiss National Bank (SNB) rose further last week, adding to evidence that the central bank has intervened to keep the franc down since scrapping the currency's cap against the euro.

Switzerland's central bank shocked financial markets last month by abandoning the more-than three-year-old cap on the Swiss franc, a policy it later said would have cost 100 billion francs (US$108 billion) to defend in January alone had it been maintained.

In the week through Jan 30, sight deposits jumped to 383.325 billion Swiss francs, SNB data showed on Monday, after surging the most since at least March 2013 the previous week to 365.486 billion.

The SNB can expand sight deposits through foreign exchange swaps and repurchases of its own debt.

Sight deposits also illustrate how inclined banks are to find an ultra-safe home for their money. The SNB has attempted to discourage new flows into francs by imposing an interest rate of -0.75 per cent on some cash deposits.

A spokesman for the SNB declined to comment on the rise in sight deposits.

REUTERS