The Swiss National Bank said on Friday it had no plan to do away with cash, nor any power to impose a fee on paper currency, amid signs that large-denomination banknotes are being hoarded as a means to avoid negative interest rates on bank deposits.
Nearly two-thirds of the Swiss banknotes in circulation on average last year were 1,000-franc notes, the SNB said, each worth about $1,050 or 970 euros at current rates, Reuters reported.
Faced with a surge in the value of the franc, traditionally seen as a “safe haven,” that has harmed Swiss exporters, the SNB announced negative rates on large deposits in December to try to make the currency less attractive.
SNB statistics showed that demand for banknotes rose in January and February, and the bank has said that the high proportion of large notes shows they are being used as a store of value. Credit Suisse said in a note to investors this week that “evidence of cash hoarding, though to a limited extent, is now visible.”
But SNB chairman Thomas Jordan told the bank’s annual shareholders’ meeting, in response to a question, that “we have no plans to do away with cash, and we don’t have the authority to impose a fee on paper currency.”
Jordan also said continued uncertainty over the Greek debt crisis could add to the upward pressure on the franc.
