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Swiss Central Bank Plunges Into NIRP, Sends Deposit Rates Negative, Scrambles Against Safe-Haven Capital Flight

Tyler Durden's picture




 

Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 am Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.

From the SNB:

The Swiss National Bank (SNB) is imposing an interest rate of –0.25% on sight deposit account balances at the SNB, with the aim of taking the three-month Libor into negative territory. It is thus expanding the target range for the three-month Libor to –0.75% to 0.25% and extending it to its usual width of 1 percentage point. Negative interest will be levied on balances exceeding a given exemption threshold.

 

The SNB reaffirms its commitment to the minimum exchange rate of CHF 1.20 per euro, and will continue to enforce it with the utmost determination. It remains the key instrument to avoid an undesirable tightening of monetary conditions resulting from a Swiss franc appreciation. Over the past few days, a number of factors have prompted increased demand for safe investments. The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate. The SNB is prepared to purchase foreign currency in unlimited quantities and to take further measures, if required.

The factors from the "past few days" in question that the SNB was envisioning to justify becoming the latest entrant to the NIRP monetary twilight zone: Russian capital flight. Per Bloomberg, "the SNB move follows Russia’s surprise interest-rate increase this week and hints at the investment pressures that resulted after that decision failed to stem a run on the ruble. Swiss officials acted as the turmoil, along with the imminent threat of quantitative easing from the ECB, kept the franc too close to its 1.20 per euro ceiling for comfort."

“This is not the magic bullet, but will buy them time,” said Peter Rosenstreich, head of market strategy at Swissquote in Gland, Switzerland. “This will relieve pressure from the floor in the short term, but not in the long term.”

The franc weakened after the announcement, trading at 1.2045 per euro at 11:08 a.m. in Zurich. Against the dollar it fell to 97.82 centimes.

To be sure, Russia's recent shocking rate hike to 17% was a factor in the Swiss decision. Then again to say that a few Russian billionaires took on the SNB and forced it to do a historic monetary policy move would be just a little bit naive. Surely, the reason for the capital flight had much more to do with the capital flight from "everywhere" as a result of the latest market turbulence which has seen a major flight out of risk assets and into fixed income assets, and also safe-haven currencies, at least until Janet Yellen's "renormalization" statement yesterday which purely coinicdentally had both keywords sought for by algos: "considerable time" and "patient."

What was also left unsaid is that the Swiss central bank is also worried about the pressure from the Eurozone as the ECB launches full-blown QE in 2015. And in a purely reflexive fashion, the SNB move also makes it that much more likely that the ECB itself will have to act even further, as central bank actions have now become a tit for tat exchange with other central banks in creeping global capital controls, even if nobody is willing to call it for what it is. One thing is clear: if and when the ECB does more, the SNB will again have no choice but to respond: as Bloomberg strategist Richard Jones writes "SNB’s decision today to introduce negative rates of -0.25% next month may be escalated if external factors like a large scale QE from ECB threatens the EUR/CHF floor, analysts say, adding that FX interventions will likely continue. Jan. 22 start date for SNB’s negative interest on sight deposits coincides with next ECB meeting, increasing the likelihood of QE announcement by the latter next month."

In any event, at least the Swiss were kind enough to give the Russians an advance notice that their cash is not welcome in the country. After all Russian billionaires could have been merely "Cyprused", all over again.

Finally, here is Goldman's take on the SNB move:

Bottom line: The Governing Board of the SNB surprisingly announced this morning that it will introduce a negative rate of -0.25% on sight deposit account balances at the SNB. The SNB's target range for the three-month Libor was also widened from 0.0% - +0.25% to -0.75% - +0.25%. In our view, today's rate decision simply underlines the determination of the SNB to enforce the minimum exchange rate target for the CHF against the Euro.

1. This morning, the SNB surprisingly announced that, on January 22, it will introduce a negative interest rate of -25bp on reserve holdings from banks at the SNB, above a threshold of 20 times the minimum reserve requirement. The SNB's target range for the three-month Libor was also widened from 0.0% - +0.25% to -0.75% - +0.25%. Over the last couple of days, the CHF has traded very close to the 1.20 level on the back of rising market volatility. The subsequent demand for safe investments attracted large capital inflows into Switzerland, eventually prompting the SNB to react.

2. According to the SNB, the measure is aimed at making investments into CHF less attractive. Although it is only banks that will have to pay the negative deposit rate, banks will pass on, to some extent at least, the negative rates to customers. It is noteworthy in that respect that some German banks - in response to the ECB's negative rates - have also started charging some clients negative deposit rates.

3. It remains to be seen how effective this measure will be and the SNB will continue to rely on FX interventions to defend the minimum exchange rate. But the measure in any case shows the determination of the SNB to maintain the lower bound for the CHF against the Euro.

Source: SNB

 

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Thu, 12/18/2014 - 07:52 | 5567519 Latina Lover
Latina Lover's picture

Law of unintended consequences... with the USSA trying to destroy the Russian economy via a currency war and pushing their Saudi lap dogs to flood the market with oil, someone forgot to calculate the second order effects.  Or, didn't give a shit. The Neocons/Neofascists will throw  Canada under the bus if it means speedbump rattles for the Russkies..

Thu, 12/18/2014 - 07:51 | 5567537 Arius
Arius's picture

it reinforces the view from that JPM analyst that ruble doesnt matter to US economy... incidentally, as mentioned above there are quite a few other things besides a few russians billioners ... but hey, we cant even cheer "let the games begin" anymorev ... it will be considered unpatriotic and short sighted ...

 

yeah well, i still say bring it on you suckers ... we know what you have cooked for us

Thu, 12/18/2014 - 08:05 | 5567552 GetZeeGold
GetZeeGold's picture

 

 

Dammit.....totally forgot about the Swiss.

Thu, 12/18/2014 - 08:15 | 5567572 philipat
philipat's picture

Welcome to the Matrix. The Banks don't want your money and don't care about you. Shit, we can print as much money as we need so just leave us alone and let us play our currency war games. The interests of our people? HAhahahahaha......

Thu, 12/18/2014 - 08:30 | 5567602 negative rates
negative rates's picture

It's more like the banks insist on having your money.

Thu, 12/18/2014 - 08:42 | 5567641 paint it red ca...
paint it red call it hell's picture

Whats theirs is theirs and whats yours is theirs too.

Thu, 12/18/2014 - 08:52 | 5567660 bania
bania's picture

My wife's nirp policy is way worse than this.

Thu, 12/18/2014 - 09:07 | 5567694 MalteseFalcon
MalteseFalcon's picture

"second order effects" = collateral damage.

Stay nimble!

Thu, 12/18/2014 - 09:25 | 5567748 CH1
CH1's picture

Lesson to the Swiss: Sheep are to be shorn.

You obeyed them and voted to abandon your gold. And now you pay to save.

 

Thu, 12/18/2014 - 09:43 | 5567829 Muddy1
Muddy1's picture

and one day fleeced

Thu, 12/18/2014 - 10:07 | 5567904 BuddyEffed
BuddyEffed's picture

This isn't your fathers banking business model anymore.   We're not in Kansas anymore Toto.  Remember 4.25 percent interests savings growth per year?   And it's gone!   I guess it's because growth is gone too.

Thu, 12/18/2014 - 10:30 | 5567991 Ahoy Polloi
Ahoy Polloi's picture

Does anyone actually believe that the Swiss 'VOTED' to abandon their gold? Does anyone actually believe in the results of any so-called 'VOTE'?

 

- or 'markets'?

- or 'BLS reports'?

- or 'TV propaganda'?

- or 'quarterly P/L statements'?

 

F***ing Matrix! ~ I believe 'The Onion' stories more than I believe any of all the BS that you read about every day.

Thu, 12/18/2014 - 10:35 | 5568013 BaBaBouy
BaBaBouy's picture

SWISS: Please, PLease, PLEASE, STOP Sending Us Your Paper Fiats Keynesian Virtual MONEY!!!

PLEASE, Our Computers Can't Count That High, Keep Your Damn Fiats Money!!!

Thu, 12/18/2014 - 11:11 | 5568216 smlbizman
smlbizman's picture

buddyeffed.....it used to be 5% as an "always" rate

Thu, 12/18/2014 - 12:35 | 5568590 Meremortal
Meremortal's picture

It's because the hyperinflationists were as wrong as they could be, which has been obvious for a long time but quietly ignored as it's so embarrassing to miss that badly.

Wrong, just the like "total economic collapse" people have been wrong for years.

"Moar doom fantasies needed, stat! We reject your reality and construct our own!"

Meanwhile Japan is going to heal and China is getting old rather than rich. Russis is doing what is always does, fail. 

Peak Oil and global warming are jokes. Get ready for another century of American dominance.

Horrific to contemplate, isn't it? 

 

Fri, 12/19/2014 - 16:44 | 5573946 papaclop
papaclop's picture

Brilliant observation. It rhymes with FDR's screwing of Americans when he banned private gold ownership.

Fri, 12/19/2014 - 16:44 | 5573947 papaclop
papaclop's picture

Brilliant observation. It rhymes with FDR's screwing of Americans when he banned private gold ownership.

Fri, 12/19/2014 - 16:44 | 5573948 papaclop
papaclop's picture

Brilliant observation. It rhymes with FDR's screwing of Americans when he banned private gold ownership.

Thu, 12/18/2014 - 09:26 | 5567752 Took Red Pill
Took Red Pill's picture

Jim Rickards had an interesting viewpoint on this. Much of Rusia's debt is in corporate bonds held by many Americans in their 401k. If Russia goes down it will spread;

http://www.bloomberg.com/video/ruble-crisis-is-russia-s-economy-in-a-tai...

 

Thu, 12/18/2014 - 09:43 | 5567822 Muddy1
Muddy1's picture

I didn't know this, but for other reasons cashed my 401 out 4 years ago.

Thu, 12/18/2014 - 13:54 | 5568950 IronForge
IronForge's picture

They won't.

They - unlike the USA - don't have much Debt relative to their GDP.

Thu, 12/18/2014 - 11:28 | 5568296 Fun Facts
Fun Facts's picture

It's all a variation on heads we win tails you lose.

This of course explains the vanishing middle class across the western world, the domain of the ZWO gods on earth, holding us all hostage with their central bank tyranny.

Thu, 12/18/2014 - 09:01 | 5567681 RaceToTheBottom
RaceToTheBottom's picture

The Swiss were morons thinking that they could plug to the Euro without being affected by it.

You cannot be half prengnant.

The arrogance of Banksters is always amazing.

Thu, 12/18/2014 - 09:26 | 5567758 CH1
CH1's picture

The arrogance of Banksters is always amazing.

The abject obedience of the masses is amazing!

Thu, 12/18/2014 - 11:30 | 5568293 ejmoosa
ejmoosa's picture

Bears repeating...

Think about the fact that they are telling the Swiss that their currency has too much purchasing power relative to other currencies and that must change.  So we need to make you just a bit poorer relative to the rest of the world.

WTF are they to decide that?

And as you say, the masses tolerate it.

Thu, 12/18/2014 - 09:45 | 5567828 Ghordius
Ghordius's picture

you mean the Swiss National Bank should have done nothing? and let the CHF appreciate to... where? just look how international FX market smacked down the NOK, in a moment where the Ruble was hiding

your "do nothing" policy would have meant that every betting portfolio and FX algo of the planet could have played with the CHF, up, and down, and up again. what fun it is when you have a ball, kids

meanwhile... the Swiss economy is tightly integrated with the eurozone's. they compete in the eurozone. for criminy, you can expect them to send you pricelists in EUR

those international FX markets are huge. for them, small and medium sized currencies are playthings. they don't need fundamentals, just... excuses

there is a reason for the EUR alliance, and it's there to see... if you want. size matters

Thu, 12/18/2014 - 12:07 | 5568485 RaceToTheBottom
RaceToTheBottom's picture

I can not argue about the NOK.   That was a smackdown, but I am not sure it is the same thing.

I admit I am not living it daily so have outsider views.  I will have to think more about it.

Thu, 12/18/2014 - 10:04 | 5567887 Ghordius
Ghordius's picture

to put it in other terms, if the CHF could appreciate according the huge demand (caused by Safe-Haven Capital Flight)...

...the Swiss Economy, particularly tourism, chemicals, pharma and the machine parts industry would have to switch to the EUR

it's the same effect as from "dollarization". the economy prefers the "bad" but stable currency to the "good" but unstable, appreciating currency

the usual way to explain it is "bad money drives out good", or Gresham's_law

the more detailed "law" states: "When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."

now of course I already hear: "but G, the Swiss have their own government". well, yes, but the Swiss economy is very small, and in the middle of the eurozone's, and tightly integrated to it

for all purposes, the CHF is now an informal member of the EUR "gang" of national currencies in hiding

Thu, 12/18/2014 - 14:01 | 5568987 IronForge
IronForge's picture

"The Swiss were morons thinking that they could plug to the Euro without being affected by it."

 

They're not.  They're playing this quite well. 


Thu, 12/18/2014 - 10:39 | 5567999 JRobby
JRobby's picture

Just walk into any TBTF branch that you do not have an account with and watch what happens. (Wells is especially entertaining and apparently, successful) 

http://www.bloomberg.com/news/2014-12-18/wells-fargo-rides-retail-deposi...

 

If you really like sociology and like a fun experiment, walk in with a big cashier's check drawn on a competitor.

 

FUCK ALL THESE FILTHY SCUMBAG LOWLIFES. FUCK THEM ALL!!!!!!!

Thu, 12/18/2014 - 08:21 | 5567583 Mountainview
Mountainview's picture

Hapless state officers at the SNB without imagination. Instead of lifting the disasterous EUR/CHF 1.20 peg and replace it by something more shrewed (trade weighted basket peg), they punish savers by zero rates! Hopeless!

Thu, 12/18/2014 - 11:11 | 5568213 rwe2late
rwe2late's picture

 I doubt the SNB Governing Board members

who decide policy are either "hapless" or "without imagination".

 

BUT,  they are certainly promoting other interests than those of "savers".

Thu, 12/18/2014 - 11:38 | 5568329 Urban Redneck
Urban Redneck's picture

That's why we have CHF 1000 notes and safe deposit boxes. Deposit rates have been 0% for a long time and outside of housing and health insurance inflation has basically been 0% for a long time.

Savers aren't being punished by this, businesses that require high volume electronic liquidity are.

Thu, 12/18/2014 - 11:20 | 5568261 HK
HK's picture

Got to bring the Russian bear to its knees

Well, maybe not the Russian bear, maybe the Swedes

https://www.youtube.com/watch?v=TkNOky3orsM

I know, it’s the Swiss, not the Swedes, Swiss doesn’t rhyme with knees, fuck all that, we need to get pissed, which rhymes with Swiss.

It didn’t start today nor yesterday nor 30 years ago but has been a problem throughout history. The bread and circus ends with us either being in chains or breaking the chains, what’s it going to be?

The lyrics:

http://www.metrolyrics.com/not-now-john-lyrics-pink-floyd.html

A little insight into the song:

https://en.wikipedia.org/wiki/Not_Now_John

Thu, 12/18/2014 - 08:06 | 5567554 USisCorrupt
USisCorrupt's picture

I do believe the Chess player Putin will announce something today saying how China is on their side and those playing checkers and marbles will wet their pants.

 

The entertainment is now daily I am so happy everything is just so perfect in this world.

Thu, 12/18/2014 - 08:25 | 5567591 Arius
Arius's picture

enjoy while it last ... putin is 100 % a team player ... there is only one team, besides appearances

Thu, 12/18/2014 - 08:35 | 5567613 Jannn
Jannn's picture

Guest Post: Australia Audits Gold Reserves At BOE

https://www.bullionstar.com/blog/koos-jansen/guest-post-australia-audits...

Thu, 12/18/2014 - 09:41 | 5567819 ZH Snob
ZH Snob's picture

this is what you swiss get for voting against the gold initiative and trusting your central bankers.

Thu, 12/18/2014 - 10:19 | 5567960 Ghordius
Ghordius's picture

I would not have voted for that initiative. I've written a few times about that, here in ZH. it was too much

the initiative asked for 1) a 20% gold quota on SNB assets; 2) repatriation of gold; and 3) ban on sales of gold by the SNB

1) or/and 2) would have been ok. 2) and/or 3) too. but all together? The Swiss happen to know a bit better their own situation

further, the SNB happens to be owned by the state banks, in Switzerland. which are owned by the Swiss states

Thu, 12/18/2014 - 11:15 | 5568239 IndyPat
IndyPat's picture

Yeah, I hear ya shill.
I will say this, you are tireless in your deluded commitment to something that is 100% doomed...right along with the rest of the economies. May as well be hugging a fucking bomb. Does it really make you feel more secure knowing you wish to drag others down the hole with you? Absolute equal odds of it blowing up anyway, but whatever you do, don't make a Hail Mary pass in the direction of sanity.
They should forgo their our security and interests and be subordinate to the overall instability and madness of the entire EU. I see what you are saying. Makes a lot of since, if everyone else is running off a cliff, why would the Swiss think that's a bad idea?
Canada and the U.S. economies are tied pretty tight. if the Canadains all the sudden said fuck it, enough of this silly shit, we are going gold standard, I wouldn't whine. First, it's smart. Second, it's none of my beeswax. Could it hurt me here in the US? Sure. But it wasn't their sane action that did it, it's the madmen thieves in control of our banks here. If the US chooses thievery as usual, it's on us, not the Canadians.

Thu, 12/18/2014 - 11:31 | 5568303 froze25
froze25's picture

You sir have a dangerous sense of self accountablity.  You need to blame others for your misfortunes before the thought police get you.  Haven't you listened to the prophet Al Sharpton or the Cleric Jesse Jackson they have been preaching the scriptures for sometime now on how "its everyones fault but your own".  

Thu, 12/18/2014 - 11:36 | 5568322 Ghordius
Ghordius's picture

"...why would the Swiss think that's a bad idea?" whatever you are talking about, note that the Swiss do think it's a good idea to peg the CHF to the EUR. Explain to me why

perhaps they don't happen to see the eurozone/EU as something instable or mad? What do they know about? It just happens to be their neighbours

Thu, 12/18/2014 - 11:41 | 5568357 IndyPat
IndyPat's picture

So, you are suggesting economic suicide is a neighborly act?
Got some strange customs over there, but ok.

I think the fact that they had the vote says different. The outcome of the vote was sad but not surprising.

Thu, 12/18/2014 - 11:45 | 5568372 Urban Redneck
Urban Redneck's picture

The referendum was a bullshit non-solution to actual problems Switzerland faces.

The best solution for Switzerland would be to break the single currency into 3 separate currencies to address the primary domestic and international uses of the CHF and remove control of Swiss gold from the SNB and the CHF.

http://www.zerohedge.com/news/2014-11-30/swiss-gold-referendum-fails-78-...

Thu, 12/18/2014 - 11:50 | 5568409 IndyPat
IndyPat's picture

Word. Ok, yeah. But was it a < bullshit solution than rolling to the EU collective lemming status quo horseshit?
The point is Swiss should be doing what is good for the Swiss.

If they were so damn neighborly as shill boy would have you believe, they would have gone full EU retard. But they didn't, did they?

Thu, 12/18/2014 - 12:35 | 5568597 Urban Redneck
Urban Redneck's picture

The sacrifice of sovereignty to join the EU was about as unpopular as the poorly worded gold initiative was. I suspect the sacrifice of monetary sovereignty would be even more unpopular.

The Swiss are neighborly, but I think Brussels (and perhaps Ghordius) think the Swiss should either jump into bed with the EU/Eurozone or get treated just like every other foreigner. People (and States) should have "special relationships" with their neighbors, differentiated from the relationships with family and strangers. But the Statecraft is almost always power-politics, despite the proliferation of the "Liberal" schools of international relations.

Thu, 12/18/2014 - 15:00 | 5569341 Ghordius
Ghordius's picture

ehm... the real problem Brussels has with Berne is... London

Big Problem, London. Way more then most imagine

Fri, 12/19/2014 - 05:43 | 5571693 Ghordius
Ghordius's picture

UR, re "Brussels (and perhaps Ghordius) think the Swiss should either jump into bed with the EU/Eurozone or get treated just like every other foreigner."

seen from distance, it would make sense, and there are many MEPs that do think so

personally, I think it would be mad. Switzerland deserves a special treatment, not because of the Swiss, but because of us

in all those alliances in which our european sovereigns engage - because of their size, and because of the size of the other main alliances/markets/etc - there is always the tendency of engaging in power-politics, and screw "the small ones", or engage in arrogant "either you are with us or against us" powerplays

and this is a tendency that has to be discouraged. Switzerland is completely encircled by "us". Yet we have to judge our moral high ground on how we treat the small

luckily, we do have plenty of small sovereigns in our alliances that do make those considerations, and do discourage the medium-sized ones from this kind of thinking. we just have to keep it up

further, our alliances have to contain the "exit door" option. which is the very basis of confederation

Fri, 12/19/2014 - 07:12 | 5571745 Urban Redneck
Urban Redneck's picture

Thanks for the clarification!

Thu, 12/18/2014 - 12:19 | 5568538 IndyPat
IndyPat's picture

I admire Switzerland on so many levels; much more so than any other country in Europe and certainly more than my nation in its current horrible state. Many principles the US only talks, the Swiss walk or at least did for a very long time. I take inspiration from her.

It's demoralizing and hard to watch.

Thu, 12/18/2014 - 14:05 | 5569006 Mountainview
Mountainview's picture

Trusting the SNB bankers, a huge mistake. Look at the CV aof the new- first female- member- a fine career with the IMF and OECD- all the right places responsible for the current mess. 

Thu, 12/18/2014 - 10:32 | 5567979 JRobby
JRobby's picture

They don't give a fuck about anyone but themselves (and the jury is out on that one)

Merry Christmas from the oligarchs

Proceed with your "celebrations" accordingly.

 

Calin on the owners:

www.youtube.com/watch?v=9dY4WlxO6i0

Thu, 12/18/2014 - 11:37 | 5568321 Jumbotron
Jumbotron's picture

I guess I'd better stock up on Swiss Miss hot cocoa.  Shit's gonna get expensive.  LOL

Thu, 12/18/2014 - 13:52 | 5568941 IronForge
IronForge's picture

Obviously, there's a "Flight" to Quality in these times; and (since the USD/T is getting less attractive a quality asset) the CHE are simply protecting themselves from any unfavorable "surges" from the Petrol and Currency instabilities. 

Those who still choose CHE will be protected; and the CHE gains in surcharges for the "protection" they provide for Savers (on behalf of their domestic producers.

I wonder if they trade/barter Petrol and Gold w/RUS...

Thu, 12/18/2014 - 07:47 | 5567522 Winston Churchill
Winston Churchill's picture

Looks like SWIFT is going to get some fees off me today.

Or I buy some more boat ballast.

Thu, 12/18/2014 - 07:50 | 5567523 Ghordius
Ghordius's picture

as a reminder, NIRP is a "tax" on banks

if a bank wants to keep their "excess sight deposits" on the central bank's books instead of lending, well, then they have to pay something

in other words, it's a way to say "look, there is liquidity. plenty of it". in other words, there is no need for an EUR-QE

Thu, 12/18/2014 - 07:51 | 5567531 Winston Churchill
Winston Churchill's picture

Which they pass on to their mugs, err customers.

Thu, 12/18/2014 - 08:09 | 5567542 Ghordius
Ghordius's picture

only if they lend. but if they don't lend... well, in theory it's a separate matter, isn't it? that credit that they do lend is not that "excess" credit they leave on the CB's books

for all purposes, the CHF is hiding under the skirts of the EUR. the NOK might need some anchor, too, and soon. we are in a currency war dictated by huge waves of USD credit washing foreign and domestic shores like tsunamis, regularly leaving some "naked on the beach" when retreating

it's the same tsunami waves that propelled things like the Turkish stock market, not long ago, or is leaving Russia and it's Ruble on a dry spot

while Switzerland is currently getting some backwash waves from Russia

Thu, 12/18/2014 - 08:05 | 5567551 Ghordius
Ghordius's picture

lol, Tyler is heaping on: "In any event, at least the Swiss were kind enough to give the Russians an advance notice that their cash is not welcome in the country: Russian billionaires could have been simply Cyprused.". Usually I'd protest a bit, but the wording is so careful, so masterful, that I can only applaud, particularly on the grammar and the innuendos

Thu, 12/18/2014 - 08:09 | 5567559 firstdivision
firstdivision's picture

Switzerland isn't a part of the EU though, so the ECB will still do a QE.

Thu, 12/18/2014 - 10:21 | 5567968 Ghordius
Ghordius's picture

sure. in January. or March. or June. or September. it has to, doesn't it?

Thu, 12/18/2014 - 11:20 | 5568258 IndyPat
IndyPat's picture

No, it doesn't. You don't have to blow yourself up. And you can admit it was an absolute stupid idea and bust the fucker up in a somewhat ordered fashion rather than picking your ass and waiting for it to blow on its own.

Thu, 12/18/2014 - 15:04 | 5569365 Ghordius
Ghordius's picture

forgot: /S

Thu, 12/18/2014 - 07:49 | 5567525 IronShield
IronShield's picture

And the hits keep coming.  But thankfully, the market is up!

Thu, 12/18/2014 - 08:25 | 5567592 GetZeeGold
GetZeeGold's picture

 

 

The state of the Union......is strong.

 

 

YOU LIE!!!

 

 

OK....can that crap.

Thu, 12/18/2014 - 08:08 | 5567532 Arius
Arius's picture

<

Thu, 12/18/2014 - 07:54 | 5567541 no more banksters
Thu, 12/18/2014 - 07:58 | 5567544 Bro of the Sorr...
Thu, 12/18/2014 - 07:59 | 5567546 nmewn
nmewn's picture

"...when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor."

In non-Keynesian terms this is normally called a fee...lol.

Thu, 12/18/2014 - 08:07 | 5567553 Tinky
Tinky's picture

Not sure which snowflake will prove decisive, but it's snowing like hell, and that distant rumble may not be thunder.

Thu, 12/18/2014 - 08:11 | 5567563 Arius
Arius's picture

if we just look on the fire ... may be it will all just go away ...

Thu, 12/18/2014 - 11:22 | 5568260 JRobby
JRobby's picture

+1000!

Thu, 12/18/2014 - 11:24 | 5568269 JRobby
JRobby's picture

When it gets going, it moves at over 100mph with a deafening roar.

Few can get out of the way of it.............

Thu, 12/18/2014 - 08:17 | 5567555 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

This broken economic system need to die.

Seriously you pay to put your money at the bank WTF ?

I'm astonished that there is not bank-run yet, at this rate better go cash or physical, maybe CNY could do the job of "save haven" that currency since years is sightly appreciating against USD...

Thu, 12/18/2014 - 10:59 | 5568152 plane jain
plane jain's picture

I remember my high school economics teacher talking about negative interest rates as a tool to boost spending. It was a laughable idea, something absurd, a thought experiment.

In practice inflation (reduced buying power) and negative interest rates on savings (reduced buying power) should both cause our theoretical rational actor to trade fiat for real goods as soon as possible.

Thu, 12/18/2014 - 11:38 | 5568338 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

Just wait that people start to trade fiat for phyzz gold --> The law of unintended consequences...

Thu, 12/18/2014 - 11:25 | 5568275 JRobby
JRobby's picture

How long will fiatso bucks hold purchasing value when the run explodes geometrically?

Not very

Thu, 12/18/2014 - 08:12 | 5567560 firstdivision
firstdivision's picture

ZIRP...NIRP...who cares.  Borrow every penny you can and buy stawks!!

Would you look at that, Vol is down 15% since open yesterday.  Color me shocked.

 

Thu, 12/18/2014 - 08:50 | 5567657 GetZeeGold
GetZeeGold's picture

 

 

I need some TARP bitch......and I need it now.

Thu, 12/18/2014 - 08:14 | 5567566 GFORCE
GFORCE's picture

This is all about protecting the CHF floor. The Swiss have never been fussy about whose money they take. With the Ruble collapsing and QE/Greek risk, there is no option. http://otdon.blogspot.co.uk/

Thu, 12/18/2014 - 08:21 | 5567582 firstdivision
firstdivision's picture

That's all honkey dory, but when is someone going to set a floor on the AUS$?  They're getting killed, even after the FOMC release yesterday. The boat seems filled up on the short side.  Might be time to run to the otherside and secure a spot.

Thu, 12/18/2014 - 08:22 | 5567587 Catullus
Catullus's picture

To maintain the floor? What a bunch of bullshit.

Tell your ecb neighbors to stop printing euros. Let the floor go. Who cares about Swiss exports?

Thu, 12/18/2014 - 10:43 | 5567983 Ghordius
Ghordius's picture

google "ECB balance sheet shrinking". plenty of articles, by now. for explanation: balance sheet goes up = "printing". balance sheet goes down = "un-printing"

not fully correct, but enough for an answer

Thu, 12/18/2014 - 08:24 | 5567594 franciscopendergrass
franciscopendergrass's picture

Introducing the new shit currency of the week, the Swiss Franc!

Thu, 12/18/2014 - 11:29 | 5568299 JRobby
JRobby's picture

Pick up the pace! We want 3 dog shit currencies each week until New Year's. Then we want 5 for every week in January 2015!

 

And tomorrow the demands will all be changed so fucking stay awake!

Billy Connolly

Thu, 12/18/2014 - 08:26 | 5567595 Debugas
Debugas's picture

one can put deposits into russian banks - nominal interest rates at 20%

Thu, 12/18/2014 - 08:27 | 5567597 erk
erk's picture

It's not an economic system anymore, it's a casino where instead of chips, they play with peoples livelyhoods.

 

Thu, 12/18/2014 - 11:36 | 5568323 JRobby
JRobby's picture

After the business failure in 2009, the bankruptcy and the divorce, Bill thought his life was over. Then he found a great job with great pay in the shale oil fields of North Dakota. He felt like he was starting his life anew! So excited for a second chance! That's him behind the garage with a fatal self inflicted gunshot wound.

Merry Christmas!

Remember Jesus Christ is Your Lord And Savior!

We will rise anew from the shambles that greed has made of our world.

The greedy will burn for eternity!

Thu, 12/18/2014 - 08:32 | 5567605 p00k1e
p00k1e's picture

Better them than us.

USA!
USA!
USA!

Even though Sony and Gingrich are surrender monkies.

Thu, 12/18/2014 - 08:41 | 5567631 AdvancingTime
AdvancingTime's picture

The term "liquidity trap" that has been used by Allen Greenspan and others can be difficult to understand. We reach a point that to much money makes it a worthless commodity. We may be reaching that point when banks are no longer willing to paid depositors for its use.

At some point the return on loaning money to banks, governments, and others is simply not worth the risk!  Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.

 It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward.  When this happens we are at the end game. The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.

http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html

Thu, 12/18/2014 - 08:58 | 5567671 Counterpunch
Counterpunch's picture

people are not hoarding cash, they're deeply in debt.  Nor have asset prices fallen.

The banks are over-levered, their ability to squeeze profits out of the future hindered by household and sovereign debt now.

There is no 'liquidity trap.'  I'm not being glib or hyperbolic when I suggest that Krugman et al are mired in formalistic dogma.

They have literally no idea what they are talking about, and all of their ideas are merely to keep an "economy," conflated conceptually with the international and central banks, chugging along as long as possible, in defiance of the laws of Thermodynamics and, well, math. 

Through all the bailouts and QE the fundamentals of the American economy of productive labor has gotten absurdly worse. 

 

If a patient loses blood and you replace it all, and then some, but the heart isn't beating, there's no perfusion to the tissues, and the brain dies.

Breaking up the banks, debt repudiation, and nationalization of the Fed would go a long way, but are the furthest from being pursued.  War, greased with absurd war propaganda and what seems to be a tightly controlled media, is the only thing the "elite" of the world, largely guided by European banking dynasties, can seem to imagine.

 

Thu, 12/18/2014 - 09:36 | 5567800 Its_the_economy...
Its_the_economy_stupid's picture

Physician Know thyself. (I am listening).

Thu, 12/18/2014 - 12:13 | 5568189 ThroxxOfVron
ThroxxOfVron's picture

"people are not hoarding cash, they're deeply in debt.  Nor have asset prices fallen. "

 

NOT just people: Corporations, Municpalities, States and Nations, are ALL deeply in debt.

The debt-based monetary system has collateralized and/or financialized/securitized almost everything it can imagine -and then created new derivatives and neo-insurance wraps/options in a vast expansion of leverage and counter-party risk.  The BANKS do not have anything to lose except their credit/debt creation monopolies and thus have nothing to lose by abusing the system to the destruction of the real economy of people, resources, goods and services...

Thu, 12/18/2014 - 12:12 | 5568507 JRobby
JRobby's picture

Allen Greenspan was part of the problem.

Helped repeal Glass Steagall

Turned the credit faucet on full blast

Fuck him

Thu, 12/18/2014 - 08:44 | 5567645 Let The Wurlitz...
Let The Wurlitzer Play's picture

I would rather lose 0.25% in a Swiss bank than 80% to a 100% in the market or US banks.

 

Thu, 12/18/2014 - 10:42 | 5568078 Ghordius
Ghordius's picture

that's what a lot of Russians are thinking, too

Thu, 12/18/2014 - 11:51 | 5568416 Bioscale
Bioscale's picture

Have you asked them?

Fri, 12/19/2014 - 05:45 | 5571694 Ghordius
Ghordius's picture

only some of them

Thu, 12/18/2014 - 11:43 | 5568370 JRobby
JRobby's picture

But, but, but......the FDIC?

(laugh track deafening)

Thu, 12/18/2014 - 08:47 | 5567652 Panic Mode
Panic Mode's picture

Doesn't surprise me, the retard majority voted no to the gold referendum. A few smart Swiss will take their money out of the bank and put into precious metals.

Thu, 12/18/2014 - 08:58 | 5567673 Debugas
Debugas's picture

there is no point in demanding swiss bank to hold gold

each individual can buy gold if she wants and hold it for herself

Thu, 12/18/2014 - 09:08 | 5567698 XAU XAG
XAU XAG's picture

@ Panic Mode

 

Doesn't surprise me, the retard majority voted no to the gold referendum. A few smart Swiss will take their money out of the bank and put into precious metals.

 

Only a few percent will........those that voted yes.

 

We have read the Russians, dumping thier currency or spending it...............

 

No mention of them buying PM's

 

IT'S THE BEST TANGABLE ASSETT AND EASILY BOUGHT AND SOLD ...............IN THIS FUBAR MARKET

Thu, 12/18/2014 - 09:39 | 5567810 Its_the_economy...
Its_the_economy_stupid's picture

one might argue that a few of the "retarded majority" were actually very clever in setting the stage for a gtake=down and have already "metalled up".

Thu, 12/18/2014 - 09:57 | 5567871 Debugas
Debugas's picture

actually russians are buying jewelry but that of cause not at the top of their purchases lists

Thu, 12/18/2014 - 08:48 | 5567654 Quinvarius
Quinvarius's picture

West forces Russian capital flight.  Russian billionaires take the cheese and deposit their money in the West.  Banks shut down FOREX connections and trap swings shut.  Negative deposit rates and other scams havest the Russian money.  Fraud complete. 

Thu, 12/18/2014 - 09:03 | 5567685 SpanishGoop
SpanishGoop's picture

...and WWIII starts.

 

Thu, 12/18/2014 - 09:10 | 5567701 RaceToTheBottom
RaceToTheBottom's picture

A small fee VS losing 50% due to currency losses?  Seems like a deal for a Russian Oligarch.

 

Thu, 12/18/2014 - 08:50 | 5567659 whackedinflorida
whackedinflorida's picture

There was a bank robbery today.  The banks robbed the customers.

Thu, 12/18/2014 - 09:17 | 5567675 GetZeeGold
GetZeeGold's picture

 

 

The cops went to check the video surveillance........believe it or not.....it disappeared.

 

 

Don't even ask about the email....

Thu, 12/18/2014 - 09:05 | 5567687 Dr. Engali
Dr. Engali's picture

I've seen more fucked up shit than I ever could have imagined in the past few years and yet the system keeps going. Fucking amazing.

Thu, 12/18/2014 - 09:09 | 5567696 GetZeeGold
GetZeeGold's picture

 

 

There behind the glass is a real blade of grass.......be careful as you pass.....move along.

https://www.youtube.com/watch?v=0VsifANR96s

 

 

Thu, 12/18/2014 - 09:05 | 5567689 carefreemanjoe
carefreemanjoe's picture

But why is it important to defend 120 EURCHF? For whom?

Thu, 12/18/2014 - 09:12 | 5567704 economists_do_i...
economists_do_it_with_models's picture

This is great news.  Banks charge negative interest.  Customers pull accounts.  Banks go under.  Amen.

Thu, 12/18/2014 - 09:19 | 5567719 GetZeeGold
GetZeeGold's picture

 

 

In a perfect world.....do you have one?

Thu, 12/18/2014 - 09:17 | 5567720 Boing_Snap
Boing_Snap's picture

Are you rethinking the No vote on Gold back money yet Switzerland?

Thu, 12/18/2014 - 09:15 | 5567709 voltrader66
voltrader66's picture

If you don't like it then deposit your money in Russia and earn 17%. What's the big deal here? Yet another junk article from ZeroProfit.

Thu, 12/18/2014 - 10:23 | 5567975 p00k1e
p00k1e's picture

Exactly.

Re-refinance the house in U.S. dollars for 3% and buy Russian bonds at 17%. 

Thu, 12/18/2014 - 09:16 | 5567711 db51
db51's picture

Ain't that the truth...but just wait.  You haven't seen anything yet.  This Clusterfuck Circle Jerk  has a long way to go.  Be prepared to Be MOAR Amazed!

Thu, 12/18/2014 - 09:15 | 5567713 Tachyon5321
Tachyon5321's picture

 

 

Banksters steal people money is not a way to support the currency exchange rate.

Thu, 12/18/2014 - 09:15 | 5567714 carefreemanjoe
carefreemanjoe's picture

Appears that an event such as negative interest rate by the swiss bank is followed by an invisible hand levitating futures to make it appear as if it is a great news for the market.

Thu, 12/18/2014 - 09:16 | 5567715 carefreemanjoe
carefreemanjoe's picture

Appears that an event such as negative interest rate by the swiss bank is followed by an invisible hand levitating futures to make it appear as if it is a great news for the market.

Thu, 12/18/2014 - 09:17 | 5567722 Kina
Kina's picture

I just rolled a deposit over at 3% in Australia.

AUD cheap now...or going to get cheaper?

 

I guess with global slow down that housing bubble looking a bit of worry if unemployment starts a steady increase.

Thu, 12/18/2014 - 09:21 | 5567736 GetZeeGold
GetZeeGold's picture

 

 

AUD cheap now...or going to get cheaper?

 

What sort of timeline are we talking about here.

 

I would say just buy dollars.....everyone else it.

Thu, 12/18/2014 - 09:21 | 5567733 Kina
Kina's picture

Attack on Russia via oil and currency attack....backfire much. Pushes China and Russia closer together..in more and more ways...the ultimate nemesis of USA hegemony.

Thu, 12/18/2014 - 10:25 | 5567984 p00k1e
p00k1e's picture

China is the middle market between the U.S. and Russia.  China will get that skim. 

Thu, 12/18/2014 - 09:29 | 5567766 hooligan2009
hooligan2009's picture

ah. remember when there was a withholding tax imposed on foreign investment in US treasuries in the early 60's? prpbably not, but I remember operating with its market effects via the creation of the Eurodollar. I also remember the creation of London interbank markets in non-dollar deposits post the oil crisis in the early 70's as OPEC members tried to diversify their holdings away from the dollar into the (then) myriad other currencies in Europe plus into yen.

Fast forward to today, the regulatory bodies have recaptured the banks operating in the deposit and bond markets, though thankfully there is no return to withholding tax on government bonds (30% of a zero yield is ummm zero in revenue).

I wonder whether there is a group out there that can circumvent the taxation of bank deposits by unelected central banks by opting out of a central bank regulated banking model.

mousetrap that!

Thu, 12/18/2014 - 09:32 | 5567778 NaiLib
NaiLib's picture

SNB/Jordan are slowly but surely destroying Switzerland. Of course Jordan is part of the worlds Central Bankers Cartel, that eventually will implode in chaos. I feel sorry for the Suisse people ....

Thu, 12/18/2014 - 10:01 | 5567881 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

But, butt, butts, they've voted "no" at the referendum they've chosen to get in the ass like Japan --> democracy at work, the lowest common denominator...

Thu, 12/18/2014 - 09:33 | 5567791 Incubus
Incubus's picture

ZIRP. NIRP. DERP.

Thu, 12/18/2014 - 09:49 | 5567843 XAU XAG
XAU XAG's picture

Incubus

 

What's DERP??

 

DIRP has been around a long time

Devaluing

Interest

Rate

Policy

Thu, 12/18/2014 - 10:23 | 5567958 XAU XAG
XAU XAG's picture

Incubus

 

Thank you.

I thought it was`somthing like

 

Declining

earnings

Ratio

percentage

 

LOL

Thu, 12/18/2014 - 10:47 | 5568103 rejected
rejected's picture

Dumb Europeons Retirement Program

Thu, 12/18/2014 - 09:44 | 5567830 Racer
Racer's picture

Stem capital flight by imposing a negative interest rate on deposits?

 

WTF?  I would TAKE my money OUT not put in IN a bank for them to steal it and to pay for the privilege as well??!

Thu, 12/18/2014 - 10:34 | 5568026 Lostinfortwalton
Lostinfortwalton's picture

They are trying to discourage citizens of EU countries from making deposits into the Swiss bank; Switzerland is not an EU country. The fear is that if the Swiss Franc appreciates too much against the Euro that Swiss goods and services will become too expensive for foreigners to buy leading to heavy unemployment and a recession in Switzerland.

Thu, 12/18/2014 - 11:03 | 5568168 rejected
rejected's picture

Discouraging EU citizens while punishing Swiss citizens whom have no choice.... no this is just another wealth extraction of the Swiss people who, like the rest of us, no longer control their government or central bank.

BOHICA!

Thu, 12/18/2014 - 12:36 | 5568609 rex-lacrymarum
rex-lacrymarum's picture

In other words, the "fear" is the usual Keynesian pablum

Thu, 12/18/2014 - 10:12 | 5567926 Hubbs
Hubbs's picture

Hey Switz, miss your 20% gold yet?

Thu, 12/18/2014 - 10:42 | 5568077 rejected
rejected's picture

Banksters, governments start corralling. Fiat constantly printed sucking out wealth of all while we continue cheering them on. Idiocracy is a documentory of mankinds future.

Thu, 12/18/2014 - 10:56 | 5568137 yogibear
yogibear's picture

Sleep with trashy people (US Federal Reserve) your liable to catch diseases and parasites (Wall Street roaches). 

Thu, 12/18/2014 - 10:57 | 5568142 jtlien
jtlien's picture

Will the SNB customers have to buy the bank a toaster if they withdraw all their money and close the account?

    

 

Thu, 12/18/2014 - 11:00 | 5568163 Ghordius
Ghordius's picture

the SNB has only banks as customers. it's a national bank, i.e. a central bank

Thu, 12/18/2014 - 11:01 | 5568167 0valueleft
0valueleft's picture

Marshmellows just don't taste the same in kool aid. Hope the 23% are voting with their CHF's and buying some tradition.

Thu, 12/18/2014 - 11:40 | 5568341 Hubbs
Hubbs's picture

Tradition.  So if I board a US plane with 19 gold Maple Leafs with face value of 50 Canadian Dollars each = 9,950 Canadian Dollars which is less than the $10,000 declaration threshold, I should be able to walk into my wife's country and not face any taxes/confiscation, etc.?

Thu, 12/18/2014 - 15:08 | 5569373 Caleb Abell
Caleb Abell's picture

It's a definite risk since many US police think that anything over $20 is clear evidence of criminal intent.  As an alternative, you may wish to buy a dozen of so fully paid --- and fully refundable --- first class airline tickets to anywhere.  They never check that stuff.  When you get across the border, turn them in for a refund.

Thu, 12/18/2014 - 21:31 | 5570979 Monty Burns
Monty Burns's picture

I know a guy who uses the 1st class airline ticket manouevre to get around cash restrictions and it seems to work.

So far anyway.

Thu, 12/18/2014 - 11:04 | 5568173 Eagle Keeper
Eagle Keeper's picture

So banks now view holding your money as servicing your debt. That's ironically true, but sad.....

Thu, 12/18/2014 - 11:29 | 5568291 Perfecthedge
Perfecthedge's picture

Switzerland: A parasite feeding on the developing world

https://wikileaks.org/wiki/Switzerland:_A_parasite_feeding_on_developing_world%3F

Switzerland has billions, if not trillions sitting in their Banks.  Now imagine skimming 0,25% off all the accounts (institutions, funds, and many, many Central Banks from African, Asian countries....

Swiss Bankers must be getting the biggest hard on in history!

Switzerland is the dirtiest and greatest scumbag-country on the planet.  The earlier they disappear the better for humanity.

 

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