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At an SNB Money Market Event in Geneva on October 29, Petra Tschudin and Thomas Moser discussed the bank’s policy of providing liquidity against eligible collateral. They said collateral rules protect the SNB’s balance sheet and support monetary policy operations, interbank market activity and payments. The supplied report excerpt does not include the full remarks or announce a policy change.
Swiss National Bank officials Petra Tschudin and Thomas Moser set out the central bank’s approach to providing liquidity against collateral at an SNB Money Market Event in Geneva on October 29, describing the framework as a way to protect the bank’s balance sheet while supporting money markets and payments. The published remarks describe the existing policy and its role; the supplied material does not report a new rule or policy change.
The SNB said it provides central bank liquidity to the financial system as part of its statutory tasks, but only against collateral that meets requirements set by the bank. Its collateral policy governs collateral for credit and repo transactions. The bank’s stated aim is to limit the credit risk it takes when lending: if a counterparty cannot meet its obligations, the SNB can sell the pledged assets to recover the funds.
The speakers linked liquidity provision to three functions: implementing monetary policy in the Swiss franc money market, supporting cashless payments, and contributing to financial stability. For monetary policy, the SNB uses repo transactions to provide or absorb liquidity, with the goal of keeping short-term market rates close to its policy rate. The remarks say that, in the environment described at the event, the policy rate was non-negative and the amount of liquidity remained high, so open-market operations were being used to absorb liquidity.
Liquidity also helps banks handle payment flows that arrive at different times during the day. The SNB can supply funds when a bank needs short-term liquidity to settle payments. Separately, it can provide liquidity support if a bank’s own buffers are insufficient. The report cites support provided during the Credit Suisse crisis as an example of that third function, while saying the event focused on money-market operations and payments.
Collateral Supports Swiss Liquidity
The policy affects how central-bank liquidity reaches financial institutions and how they manage short-term funding. Eligible collateral is not just a safeguard for the SNB: it also shapes which assets banks can use to obtain funds and how readily they can move those assets through market infrastructure.
The speakers said the SNB GC Basket has a central role in monetary-policy implementation and payments. They described it as combining high quality requirements with broad international coverage, and said it has become an established collateral standard in the Swiss interbank repo market. A shared standard and integrated infrastructure can help participants mobilise collateral, supporting liquidity flows between institutions as well as the SNB’s own operations.
For the public, the connection is indirect but practical. Reliable liquidity arrangements can help the central bank implement monetary policy and help banks settle payments smoothly. Collateral requirements also limit the SNB’s exposure to counterparties, which the speakers said helps protect its balance sheet and preserve its ability to carry out its statutory mandate over time.
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Three Tasks Behind SNB Liquidity
The National Bank Act assigns the SNB several responsibilities that involve making liquidity available to the financial system. In the Swiss franc money market, banks lend to one another over short periods, with resulting cash flows settled through sight deposits at the SNB. The central bank uses repo transactions to influence liquidity conditions and keep short-term interest rates close to its policy rate.
Liquidity provision also addresses the timing of cashless payments. A bank can face outgoing payments before incoming funds arrive, creating a temporary need for central-bank money. The SNB’s third role is liquidity support when a bank considers its own buffers inadequate. The remarks distinguish that support from the event’s main focus on monetary-policy operations and payments.
The SNB said it reviews its collateral policy continually and adjusts it when market conditions or technology change. Its stated criteria are that the framework should be effective, efficient and transparent. Assets must be legally and operationally usable as collateral, and the process of mobilising them should be reliable and manageable.
No Specific Rule Change Announced
The supplied excerpt does not specify any change to collateral eligibility, valuation, haircuts, operational procedures or the composition of the SNB GC Basket. It also does not provide detailed figures for current liquidity operations or payment-related facilities. The account therefore describes the policy’s purpose and broad operation, but does not establish that the SNB has adopted a new measure at this event.
The full speech may contain further discussion beyond the material supplied here. Without those details, it is not clear whether the speakers identified particular market or technology developments that could prompt a future adjustment, or set out any timetable for such a review.
Policy Reviews Continue
The SNB says it will continue reviewing its collateral policy and make adjustments when it considers them necessary in response to changes in markets or technology. The published material does not name a next review date, planned operational change or further milestone. Market participants will need to look to subsequent SNB communications for any specific revisions to eligible collateral or the way liquidity is supplied.
Key Questions
What did the SNB officials discuss?
Petra Tschudin and Thomas Moser discussed how the SNB provides central-bank liquidity against collateral and how that framework supports monetary policy, payments and financial stability.
Did the SNB announce a new collateral policy?
No new policy is announced in the supplied remarks. They describe the existing framework and say the SNB reviews it on an ongoing basis.
Why does the SNB require collateral?
Collateral limits the central bank’s credit risk. If a counterparty cannot repay, the SNB can sell the pledged assets, helping protect its balance sheet.
What is the SNB GC Basket?
The remarks describe it as a collateral basket with high quality requirements and broad international coverage. The SNB says it plays a key role in monetary-policy implementation and payments and is established as a standard in the Swiss interbank repo market.
When might the SNB change its collateral rules?
The SNB says it reviews the policy continually and adjusts it as needed for changes in market conditions and technology. The supplied material gives no date or specific planned revision.
Source: snb.ch
