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SWISS NATIONAL BANK

ECB announces major bond buying program

The Swiss franc edged higher against the euro on Thursday after European Central Bank president Mario Draghi announced the bank will buy €60 billion of European debt every month from March 2015 until September 2016.

Published: 22 January 2015 16:07 CET
ECB announces major bond buying program
ECB president Mario Draghi. Photo: DPA

"The combined monthly purchases of public and private sector securities will amount to €60 billion" Draghi told assembled journalists at a press conference in Frankfurt.

The bond-buying programme will continue "until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, two percent", he added.

Spending €60 billion a month for that long would mean the bank injecting over €1.1 trillion into the region's sputtering economy.

The euro immediately dropped sharply against the US dollar on the news, to below $1.15 – its lowest since 2003 – in a sign that the programme was more aggressive than markets had been expecting.

The Swiss franc rose to 1.01126 euros, but slipped against the dollar after several days of advances. 

SWISS NATIONAL BANK

Why is the demand for 1,000-franc banknotes growing in Switzerland?

Large-denomination banknotes, like the 1,000-franc note, are rarely used for everyday transactions in Switzerland. So why are they becoming more popular?

Published: 13 January 2021 15:21 CET
Why is the demand for 1,000-franc banknotes growing in Switzerland?
The kind of banknotes the Swiss like to stash away. Photo by AFP

The demand for 1,000-franc notes has risen in the past months, data from the Swiss National Bank (SNB) indicates.

CHF1,000 converts to approximately €925.75, £824,63 or $US1126.98. 

Whether withdrawing the money from an ATM machine or directly from a bank, customers request large-bill denominations more often than before.

“We do know there is more cash being currently withdrawn in large notes, but it changes hands less often” Sarah Lein, a monetary policy expert from the University of Basel told SRF public broadcaster.

This means the money is not being spent but stashed away.

“We can conclude that some large notes end up in a safe”, she added.

READ MORE: Switzerland’s economy forecast to recover 'from summer onwards' 

The reason, she said, is that many banks charge their customers negative interests on large deposits.

“Therefore, it could be cheaper to simply withdraw the cash in large notes and keep it in a safe, especially since inflation has been extremely low for a long time”, Lein added.

This is not unusual — in times of crisis, more cash is often in demand.

But could this cause the shortage of 1,000-franc bills?

That is not likely to happen, Lein pointed out.

“Both the central and commercial banks have enough cash stored in their vaults to meet such demand. So there is always enough money available”, she said.

There is about 48.6 billion francs floating around in the form of 1,000-franc notes, constituting 59 percent of all Swiss notes in circulation. 

It is the world’s second-largest denomination after Brunei's B$10,000 note.

READ MORE: What do people in Switzerland spend their money on?

 

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