Dec 8 (Reuters) - The Swiss National Bank is widely expected to leave interest rates unchanged at record-lows at a quarterly policy meeting on Thursday and maintain its threat to intervene in the market to keep the Swiss franc from rising.
Here are some key monetary policy actions and other steps the SNB has taken in the course of the crisis to keep the country out of deflation and to stabilise the financial system.
INTEREST RATE CUTS
The SNB has cut the target for three-month Libor by a total of 250 basis points since October 2008 to 0.25 percent, a level seen until now only in the 2003 recession.
STOPPING RISE OF FRANC VS EURO
The SNB pledged to fight any rise of the Swiss franc against the euro to keep the country out of deflation.
Though the SNB confirmed only the first intervention on March 12, markets assume that the central bank has intervened at least four times since to weaken the franc against the euro.
The franc has mostly been stuck in a range between 1.50 and 1.52 per euro since the interventions started. But many foreign exchange strategists still see the franc well supported.
INCREASING LIQUIDITY
The SNB has raised liquidity substantially by engaging in longer-term repo operations, offering 3-month, 6-month and 12-month funds at 0.05 percent on top of its 1-week offers.
However, the SNB has already stopped 6-month and 12-month operations in recent months.
Base money on the SNB's balance sheet -- which has more than doubled after the launch of the unconventional policy -- has fallen from the April-peak as demand for liquidity fades.
The generous liquidity provisions have helped to bring the LIBOR down to 0.25 percent.
COVERED AND CORPORATE BONDS
The SNB said in June it had bought 2.5 billion Swiss francs' worth of covered bonds and 300 million francs' worth of corporate bonds so far and said it plans to continue buying selectively. The SNB has not set any limit on volumes.
The SNB said already after its September meeting that its bond purchases will continue only 'if needed' as risk premia and credit spreads had come down.
SNB statistics show that the central bank's holdings of Swiss franc bonds have actually declined in October.
UBS RESCUE
The SNB set up a fund for toxic UBS assets as part of the government's bailout of the bank in October 2008, taking nearly $40 billion of illiquid securities off UBS's balance sheet.
NEW MONETARY POLICY TOOLS
The SNB has introduced a number of new tools to provide liquidity in francs and dollars to banks in Switzerland and francs to banks abroad.
It has offered dollar repos and sealed swap agreements with the European Central Bank and a number of eastern European central banks to ease strains on the money market.
However, both tools face little to no demand by now as the market recovery continues.
BALANCING LIQUIDITY
The SNB also brokered a series of covered bond (or Pfandbrief) deals, in which UBS and Credit Suisse got cash from Swiss regional banks.
The SNB saw these deals as a way of balancing money between Swiss banks and helping UBS and Credit Suisse meet their refinancing needs after many Swiss stashed their money with smaller, regional banks in the course of the credit crisis.
Over recent months, the interest in such deals has also declined as money markets have normalized.
For a Preview on the SNB decision click on
For a factbox with SNB comments, click on
For a chronology of the SNB rate moves click:
(Reporting by Sven Egenter; editing by Patrick Graham) Keywords: SWISS SNB/MEASURES (sven-markus.egenter@thomsonreuters.com; +41.58.306.7351; Reuters Messaging: sven-markus.egenter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Here are some key monetary policy actions and other steps the SNB has taken in the course of the crisis to keep the country out of deflation and to stabilise the financial system.
INTEREST RATE CUTS
The SNB has cut the target for three-month Libor by a total of 250 basis points since October 2008 to 0.25 percent, a level seen until now only in the 2003 recession.
STOPPING RISE OF FRANC VS EURO
The SNB pledged to fight any rise of the Swiss franc against the euro to keep the country out of deflation.
Though the SNB confirmed only the first intervention on March 12, markets assume that the central bank has intervened at least four times since to weaken the franc against the euro.
The franc has mostly been stuck in a range between 1.50 and 1.52 per euro since the interventions started. But many foreign exchange strategists still see the franc well supported.
INCREASING LIQUIDITY
The SNB has raised liquidity substantially by engaging in longer-term repo operations, offering 3-month, 6-month and 12-month funds at 0.05 percent on top of its 1-week offers.
However, the SNB has already stopped 6-month and 12-month operations in recent months.
Base money on the SNB's balance sheet -- which has more than doubled after the launch of the unconventional policy -- has fallen from the April-peak as demand for liquidity fades.
The generous liquidity provisions have helped to bring the LIBOR down to 0.25 percent.
COVERED AND CORPORATE BONDS
The SNB said in June it had bought 2.5 billion Swiss francs' worth of covered bonds and 300 million francs' worth of corporate bonds so far and said it plans to continue buying selectively. The SNB has not set any limit on volumes.
The SNB said already after its September meeting that its bond purchases will continue only 'if needed' as risk premia and credit spreads had come down.
SNB statistics show that the central bank's holdings of Swiss franc bonds have actually declined in October.
UBS RESCUE
The SNB set up a fund for toxic UBS assets as part of the government's bailout of the bank in October 2008, taking nearly $40 billion of illiquid securities off UBS's balance sheet.
NEW MONETARY POLICY TOOLS
The SNB has introduced a number of new tools to provide liquidity in francs and dollars to banks in Switzerland and francs to banks abroad.
It has offered dollar repos and sealed swap agreements with the European Central Bank and a number of eastern European central banks to ease strains on the money market.
However, both tools face little to no demand by now as the market recovery continues.
BALANCING LIQUIDITY
The SNB also brokered a series of covered bond (or Pfandbrief) deals, in which UBS and Credit Suisse got cash from Swiss regional banks.
The SNB saw these deals as a way of balancing money between Swiss banks and helping UBS and Credit Suisse meet their refinancing needs after many Swiss stashed their money with smaller, regional banks in the course of the credit crisis.
Over recent months, the interest in such deals has also declined as money markets have normalized.
For a Preview on the SNB decision click on
For a factbox with SNB comments, click on
For a chronology of the SNB rate moves click:
(Reporting by Sven Egenter; editing by Patrick Graham) Keywords: SWISS SNB/MEASURES (sven-markus.egenter@thomsonreuters.com; +41.58.306.7351; Reuters Messaging: sven-markus.egenter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.