TL;DR
Get smart everyday buys delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
At a Swiss National Bank Money Market Event in Geneva on Oct. 29, Petra Tschudin and Thomas Moser described how the SNB provides central bank liquidity only against sufficient collateral. They said the SNB GC Basket and shared repo-market infrastructure help make collateral usable for monetary policy and payments; the speech does not announce a specific policy change.
Petra Tschudin and Thomas Moser set out the Swiss National Bank’s approach to providing liquidity against collateral at the SNB’s Money Market Event in Geneva on Oct. 29, describing how its rules protect the central bank’s balance sheet while supporting monetary policy and payments. The speech explains the existing framework; the published material does not announce a new collateral rule or a change to the SNB’s policy.
The speakers said the SNB provides central bank liquidity to the financial system as part of its statutory tasks, but only against collateral that meets requirements in its collateral policy. Those tasks include implementing monetary policy in the Swiss franc money market, supporting cashless payments and contributing to financial stability. The Geneva event focused on the first two uses: money-market operations and the liquidity banks may need to settle payments.
The speech describes collateral policy as a framework for the SNB’s credit and repo transactions. The bank’s stated aims are effectiveness, efficiency and transparency: eligible assets must be deliverable and legally usable as security, and the collateral must be capable of being mobilised reliably when needed. According to the speakers, collateralisation limits the SNB’s credit risk if a counterparty cannot meet its obligations.
The speakers also highlighted the SNB GC Basket, saying it combines high quality requirements with a broad international focus. The basket has become a collateral standard in the Swiss interbank repo market, according to the speech. A common standard and integrated market infrastructure, the speakers said, help participants mobilise collateral and support monetary-policy implementation and payment operations.
Collateral’s Role in Swiss Liquidity
The framework matters because central bank liquidity is not simply a matter of making funds available: banks must be able to provide acceptable collateral and move it into place. That affects the SNB’s capacity to conduct repo operations and can shape how liquidity is redistributed between banks in the money market. A broadly usable market standard may reduce operational friction when institutions need to mobilise assets, although the speech does not quantify any effect on costs or liquidity access.
Collateral rules also connect operational safeguards with the SNB’s public mandate. By securing its lending, the SNB seeks to contain losses if a counterparty defaults and protect its balance sheet. The speech presents that protection as supporting the bank’s ability to carry out its statutory work over time. Separately, access to liquidity for payment settlement can help banks manage mismatches between incoming and outgoing payments during the day.
Products Worth Considering
FLEXISPOT Standing Desk with Monitor Riser & Cable Management
FLEXISPOT EN1 Electric Standing Desk, 48 x 24 in, Black
Brother TD-2020A 2‑Inch Direct Thermal Desktop Label Printer with USB
As an affiliate, we earn on qualifying purchases.
How the SNB Uses Liquidity
The SNB uses repo transactions to provide or absorb liquidity in the Swiss franc money market, with the stated aim of keeping short-term market rates close to its policy rate. Tschudin and Moser described a change in the direction of operations across interest-rate environments: during the period of negative interest rates, the SNB sometimes supplied liquidity to counter temporary upward pressure on short-term rates. In the environment described in the speech, with a non-negative policy rate and liquidity still high, open-market operations are used to absorb liquidity.
The speakers distinguished those monetary-policy operations from liquidity used to support payments. Banks settle payments through sight deposits at the SNB, and a bank can need funds at short notice because payments arrive and leave at different times. They also mentioned liquidity support provided during the Credit Suisse crisis as an example linked to the SNB’s financial-stability task, while clarifying that the event’s focus was money markets and payments.
“The SNB provides the financial system with central bank liquidity. It always does so against collateral.”
— Petra Tschudin and Thomas Moser, in their SNB speech
No Specific Rule Change Announced
The published speech sets out the SNB’s approach but does not specify changes to eligible assets, collateral haircuts, operational terms or the composition of the GC Basket. It also gives no new figures for liquidity operations or the volume of collateral mobilised. The reported benefits of the common standard are described qualitatively; the speech provides no quantified estimate of its impact on market functioning.
The SNB says it reviews its collateral policy continually and adjusts it when market conditions or technology change. The speech does not identify a pending review, a timetable for possible adjustments or particular technological developments that would prompt a change.
Ongoing Review, No Timetable
The SNB says it will continue to review its collateral policy and make adjustments as needed in response to changing market conditions and technological developments. No next decision date or specific policy milestone is given in the speech. Market participants will need to look to subsequent SNB communications for any concrete changes to eligibility rules, collateral operations or the GC Basket.
Key Questions
What did the SNB announce on Oct. 29?
No specific policy change was announced in the published speech. Petra Tschudin and Thomas Moser explained the SNB’s existing approach to providing liquidity against collateral.
Why does the SNB require collateral?
The SNB says collateral limits its credit risk if a counterparty cannot meet its obligations. It can sell pledged assets to help avoid a loss, protecting the bank’s balance sheet.
What is the SNB GC Basket?
It is a collateral basket that the speakers described as meeting high quality requirements while taking a broad international approach. They said it has become a collateral standard in the Swiss interbank repo market.
What remains unknown after the speech?
The speech does not set out any planned changes, a timetable for decisions or detailed figures on collateral and liquidity operations. The SNB says it reviews the policy on an ongoing basis.
Source: snb.ch
