SNB offers USD 10 bn in overnight credit

21st October 2008, Comments 0 comments

In the first euro-Swiss franc swap operation, SNB is offering USD 10 billion in overnight liquidity to banks.

21 October 2008

FRANKFURT -- The European Central Bank launched on Monday its first ever one-week swap of Swiss francs for euros in a bid to increase flows of the Swiss currency among eurozone commercial banks.

The Bank of England and the Swiss National Bank Monday both offered USD 10 billion (CHF 11.52 billion) in overnight liquidity to banks as part of a daily credit operation.

The BoE said it received bids of USD 8.9 billion from its limit of 10 banks. The weighted average accepted rate on the money was 1.6 percent.

The SNB said it received bids for just USD 900 million from four bidders. The weighted average interest rate on the offer was 1.5 percent.

The ECB, meanwhile, has said it would monitor the credit situation but not offer overnight liquidity unless it deemed it necessary.

The ECB and the SNB on Monday also made their first swap of Swiss francs, part of a process announced last week.

The arrangement, meant to give euro zone banks Swiss franc liquidity, will go on as long as needed and at least until January 2009.

The ECB offered banks EUR 20 billion (CHF 30.55 billion) at a rate of CHF1.4554 per euro, including a margin of 5 percent to cover the foreign exchange risk.

Next Monday, the ECB will take back the francs at a rate of CHF1.4547 per euro.

[AP / Expatica]

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