SNB’s Jordan Tells Banks It’s Not His Job to Keep Them Happy

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Swiss National Bank President Thomas Jordan has little patience for complaints by banks about the country’s negative interest rates.

“It’s not our task to make the financial sector happy,” Jordan said in a Bloomberg Television interview in Bern on Thursday after the central bank kept its deposit rate at a record-low -0.75%. “It’s our task to maintain price stability in Switzerland and to support the economy and we are taking the decisions in order to achieve those goals.”

The SNB’s negative interest rates have been in force for more than four years, part of the central bank’s efforts to keep the franc from appreciating too much.

The policy has a tiering provision which gives institutions with a Swiss banking license a certain exemption level before the penalty kicks in. This setup means more than 50% of the deposits with the SNB were excluded from the negative rate as of the end of 2018, according to calculations by Maxime Botteron, an economist at Credit Suisse in Zurich.

Yet the system hasn’t stopped Swiss banks from repeatedly criticizing the central bank’s policy, saying it hurts their profitability and puts them at a competitive disadvantage.

Jordan declined to say whether the SNB’s next move would be a cut or a hike and reiterated the central bank’s pledge to intervene in currency markets if necessary.

--With assistance from Catherine Bosley and Brian Swint.

To contact the reporter on this story: Guy Johnson in London at gjohnson87@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss

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