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| Swiss National Bank cuts interest rate to minus 0.25% | Swiss National Bank cuts interest rate to minus 0.25% |
| (35 minutes later) | |
| Switzerland's National Bank (SNB) has brought in a negative interest rate cutting the value of large sums of money left on deposit in the country. | |
| The Bank has imposed a rate of minus 0.25% on "sight deposits" - a form of instant access account - of more than 10m Swiss francs ($9.77m). | |
| It is trying to lower the value of the Swiss franc, which has risen recently. | It is trying to lower the value of the Swiss franc, which has risen recently. |
| Russia's market meltdown and a dramatic plunge in the oil price have led investors to seek "safe havens". | |
| Switzerland typically sees money flow in during economic uncertainty. | |
| The new rate will be introduced on January 22. | |
| Reasons | |
| SNB said in a statement: "Over the past few days a number of factors have prompted increased demand for safe investments. | SNB said in a statement: "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 introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate." |
| The central bank has a cap of €1.20, above which it tries to prevent the franc rising. | The central bank has a cap of €1.20, above which it tries to prevent the franc rising. |
| Too high a rate has the effect of making Swiss export products more pricey. | |
| Switzerland is also chary about attracting yet more money into its banking heavy small country. | |
| Before the announcement, the Swiss franc was buying €1.209. | |
| The statement brought the rate down immediately, but at €1.203 in early trading, it remains above the target rate. | |
| The European Central Bank (ECB) also introduced negative interest rates, albeit for very different reasons. | |
| The ECB wants to keep money out of its banks, not because it wants to reduce the value of the euro but because it wants money flowing round the eurozone countries to boost investment and spending. | |
| Germany's Commerzbank also recently introduced negative interest rates for big corporate clients, but it said that was linked to the ECB's negative rates policy. |