A Swiss National Bank (SNB) survey released stated that the Swiss companies are not stockpiling cash in their strongrooms and offices to avoid being hit by negative interest rates. The SNB has charged commercial banks a negative rate of minus 0.75% since January 2015. This is as a part of its strategy to weaken demand for the safe-haven franc.
Some banks have passed on the charge to their customers. By this, the fears of people are triggered and they have become anxious. So that they can avoid it and could respond by hoarding cash. But most companies (58%) told the SNB that they did not keep cash as a store of value in the survey of 2,000 companies in Switzerland, and that too which were carried out by the central bank. This share is more than double the share of companies holding cash for imminent transactions.
A third of companies held up to 50,000 Swiss francs in cash. But just 1% held more than 1 million francs in cash. Most companies said that they kept the cash on hand as a safety net, with less than 10% saying it was to avoid negative interest rates. Central banks are generally against cash hoarding, as it erodes the effectiveness of monetary policy. A study also showed that 70% of Swiss households kept cash at home as a store of value.
