Previous post Next post

2023-11-09 – Thomas Moser: Implementing monetary policy with positive interest rates and a large balance sheet: First experiences

In September 2022, the Swiss National Bank (SNB) raised its policy rate back into positive territory. At the same time, it adopted a new approach to implementing monetary policy in the money market. This approach employs two levers: the tiered remuneration of reserves, also referred to as reserve tiering, and reserve absorption.

The speech explains why, with a large central bank balance sheet, remunerating the reserve holdings of commercial banks is the only practical way to achieve positive money market interest rates. It also reviews the SNB’s experience with the new implementation approach and discusses an adjustment to the reserve tiering framework – the lowering of the threshold factor from 28 to 25 – which will take effect on 1 December 2023.

In addition, the speech touches on how the ongoing reduction of central bank balance sheets may affect monetary policy implementation frameworks: Should central banks return to the implementation frameworks in use before the Global Financial Crisis?

Full story here Are you the author?
About Speeches
Previous post See more for 1.) SNB Press Releases Next post
Tags: ,

Permanent link to this article:

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.