TL;DR
Get business pricing on office and shipping supplies
- Business-only prices and quantity discounts
- Tax-exempt purchasing
- Multiple users, one account, clear invoices
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 policy limits the Bank’s credit risk and supports money-market operations and payments; the supplied remarks do not announce a specific policy change.
Petra Tschudin and Thomas Moser of the Swiss National Bank said on Oct. 29 that the Bank provides central-bank liquidity to the financial system only against sufficient collateral, describing the policy’s role in monetary policy, payments and financial stability. Their remarks at the SNB’s Money Market Event in Geneva explain the framework; the supplied speech does not announce a new collateral rule or operational change.
The officials said the SNB’s statutory responsibilities involve providing liquidity for three purposes: implementing monetary policy in the Swiss franc money market, supporting cashless payments and contributing to financial stability. The event’s focus, they said, was the first two. The Bank’s collateral policy sets the conditions for collateral used in its credit and repo transactions.
Tschudin and Moser said requiring collateral limits the SNB’s credit risk: if a counterparty cannot meet its obligations, the Bank can sell the pledged assets to avoid a loss. They described the policy’s aims as protecting the SNB’s balance sheet while making liquidity provision effective, efficient and transparent. They also said eligible assets must be deliverable, legally usable as security and capable of being mobilised reliably when needed.
The speech describes different uses of liquidity operations. The SNB uses repo transactions to provide or absorb liquidity to keep short-term money-market rates close to its policy rate. It can also provide short-term liquidity to help banks meet payment flows. Separately, it may offer support if a bank’s own liquidity buffers are inadequate. The officials cited assistance during the Credit Suisse crisis as an example of the latter function.
Collateral Links Rates and Payments
The policy matters because collateral determines whether and how banks can access central-bank liquidity. That access supports the functioning of the Swiss franc money market and can help banks manage uneven payment inflows and outflows during the day. According to the officials, collateral requirements also protect the SNB from losses on its lending and help preserve its financial independence.
The officials highlighted the SNB GC Basket as a shared collateral standard in the Swiss interbank repo market. They said it combines high quality requirements with a broad international focus. A common standard and integrated market infrastructure, they argued, make it easier to mobilise collateral, supporting monetary-policy implementation and payment operations. The speech presents these as features of the existing framework, not as evidence of a newly introduced measure.
Products Worth Considering
Samsung 27 Odyssey OLED G5 (G50SF) QHD QD-OLED Gaming Monitor
FLEXISPOT EN1 Electric Standing Desk, 48 x 24 in, Black
Logitech MX Master 4 for Mac, Ergonomic Bluetooth Mouse with Haptic Feedback, Ultra-Fast Scrolling, USB-C Charging, for MacOS, iPadOS, Windo
As an affiliate, we earn on qualifying purchases.
Three Statutory Liquidity Roles
The National Bank Act provides the basis for the SNB’s liquidity role, according to the speech. In the money market, institutions lend short-term funds to one another, with transactions settled through sight deposits at the SNB. The Bank uses repo operations to influence the amount of liquidity and keep short-term rates close to its policy rate.
Tschudin and Moser said the operating direction depends on conditions. During periods of negative interest rates, the SNB sometimes supplied liquidity despite already high levels in the system to counter temporary upward pressure on short-term rates. In the environment described in the speech—where the policy rate was non-negative and liquidity remained high—open-market operations were being used to absorb liquidity. The officials also described payment-related liquidity as a response to banks’ short-term needs as payments arrive and leave at different times.
The speech says the SNB reviews its collateral policy on an ongoing basis and adjusts it when market conditions or technology change. That is background on the Bank’s stated approach, not an announcement that a review has resulted in a specific revision.
“The SNB provides the financial system with central bank liquidity. It always does so against collateral, and this has to meet requirements set out by the SNB in its collateral policy.”
— Petra Tschudin and Thomas Moser, SNB officials, in remarks at the Money Market Event
No Specific Rule Change Disclosed
The supplied remarks do not specify any newly added or removed eligible assets, changes to collateral valuation or haircuts, or a timetable for policy revisions. They also do not give figures for the liquidity operations discussed, the size of the collateral pool or the current composition of the SNB GC Basket. The speech says the policy is reviewed continuously, but does not identify a particular change under consideration.
The officials’ account sets out the SNB’s rationale and operating framework. It does not quantify how much the collateral standard has affected market liquidity or payment performance, so those impacts cannot be measured from the material provided.
Ongoing Review, No Date Set
The SNB says it will continue reviewing its collateral policy and make adjustments if market conditions or technology warrant them. The remarks set no deadline and name no next policy decision. Any later change would need to be established through a separate SNB announcement or updated policy documentation.
For now, the immediate takeaway is the Bank’s description of its current approach: liquidity is provided against sufficient collateral, with the SNB GC Basket serving as an established standard in the interbank repo market. The supplied speech does not report a change to that arrangement.
Key Questions
What did the SNB officials announce on Oct. 29?
Petra Tschudin and Thomas Moser described how the SNB’s collateral policy governs liquidity provision. The supplied remarks do not announce a specific policy change.
Why does the SNB require collateral?
The officials said collateral limits the Bank’s credit risk. If a counterparty fails to meet its obligations, the SNB can sell pledged assets to avoid a loss.
What is the SNB GC Basket?
The speech describes it as a collateral basket with high quality requirements and broad international coverage. The officials said it has become an established standard in the Swiss interbank repo market.
What kinds of liquidity does the SNB provide?
The officials identified liquidity for monetary-policy implementation, support for cashless payments and assistance related to financial stability. The event focused on the first two roles.
Is the SNB planning a collateral-policy revision?
The SNB says it reviews the policy continuously and adjusts it as needed, but the remarks do not identify a pending revision or provide a timetable.
Source: snb.ch
