(Bloomberg) -- The Swiss National Bank will lower the threshold factor for remunerating sight deposits again, making a minor adjustment to how much interest banks earn for parking cash at the institution.
The factor determining which part of lenders’ sight deposits earns the full SNB benchmark rate of 0.5% will be cut to 20 times their minimum reserve requirement from Feb. 1. That’s down from 22 times now, according to a statement published Monday.
This is the second reduction subsequent to an increase in mandatory holdings at the central bank, which has been in force since July. That automatically raised the amount on which financial institutions get the full interest rate. Cutting the multiplier counteracts that effect.
The SNB has had a system of tiered remuneration in place since it re-entered positive rates in 2022. If lenders park more cash at the central bank than the threshold allows, the exceeding amount earns interest of 50 basis points less than the policy rate, which — since the rate cut last week — means 0%. The regime is intended to boost activity on the money market.
“The adjustment of the factor has no impact on the current monetary policy stance,” the SNB said. “The SNB regularly reviews the remuneration of sight deposits and makes adjustments if necessary.”
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