(Bloomberg) --
The Swiss Bankers Association upped the ante in its campaign against the central bank’s negative rates, saying the policy probably isn’t effective anymore and should be scrapped.
“Negative interest rates no longer fulfill their economic purpose: the Swiss franc is not overd, prices are stable, and the economy has adjusted to the current realities,” the group said in a report published on Thursday, adding that the franc was now close to its equilibrium versus the euro. “From an overall economic perspective, it is necessary to pave the way for an exit from crisis mode.”
The financial sector blames the Swiss National Bank’s deposit rate of -0.75%, implemented to maintain the yield spread with the euro area and stem pressure on the haven franc, for compressing profit margins and making it hard to generate sufficient returns.
It’s not the first time that the SNB has come under fire for the policy, enacted in early 2015, when the European Central Bank had already taken its deposit rate negative and was about to embark on quantitative easing.
In September, the SNB gave banks more room to breathe by amending its exemption threshold for the punitive charge. The change takes effect next month.
With the global economy in the throes of a slowdown, SNB officials have said the policy of negative rates remains essential and that low interest rates are a global phenomenon.
While the SNB hasn’t released a detailed assessment of negative rate policy, ECB President Mario Draghi said his institutions’ asset purchases and subzero borrowing costs had added 2.7 percentage points to real output growth in the region between 2015 and 2018.
An SNB spokeswoman declined to comment on the SBA’s report.
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