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FRANC

Euro hits fresh lows against Swiss franc

The euro dropped to its lowest level ever against the Swiss franc during currency trading on Friday, a day after the European Central Bank introduced a scheme to inject €1.1 trillion into the eurozone’s economy over 18 months.

Published: 23 January 2015 12:04 CET
Euro hits fresh lows against Swiss franc
Photo: The Local

Shortly before 10am, the single currency for Europe dipped below 98 cents to trade at 97.81 cents before recovering shortly after to 98.25.

The euro has continued to weaken against the franc since the Swiss National Bank announced last week that it was abandoning a policy of pegging the Swiss currency at a 1.20 rate.

The ECB’s subsequent “quantitative easing” policy, involving the monthly purchase of €60 billion of bonds, has had the effect of driving already low interest rates even lower in the eurozone.

This in turn has put downward pressure of the euro.

But the Swiss franc has also sharply appreciated against the US dollar, which before last week was worth more than the franc.

On Friday morning, the greenback was trading on FX markets for around 0.8712 francs. 

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“We do know there is more cash being currently withdrawn in large notes, but it changes hands less often” Sarah Lein, a monetary policy expert from the University of Basel told SRF public broadcaster.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