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International liquidity provision during the financial crisis: a view from Switzerland

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Author Info

  • Raphael Auer
  • Sébastien Kraenzlin

Abstract

The authors document the provision of liquidity in Swiss francs (CHF) by the Swiss National Bank (SNB) to banks located outside Switzerland during the recent financial crisis. What makes the Swiss case special is the size of this liquidity provision—at times, 80 percent of all short-term CHF liquidity provided by the SNB—and the measures adopted to distribute this liquidity. In addition to making CHF available to other central banks via swap facilities, the SNB also allows banks outside Switzerland to directly participate in its repurchase agreement transactions. Although this policy was adopted for reasons predating the 2007-09 financial crisis, it proved tremendously helpful during the crisis by providing the European banking system direct access to the primary funding facility for CHF.

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Bibliographic Info

Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2011)
Issue (Month): Nov ()
Pages: 409-418

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Handle: RePEc:fip:fedlrv:y:2011:i:nov:p:409-418:n:v.93no.6

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Related research

Keywords: Liquidity (Economics) ; Financial crises ; Switzerland;

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References

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  1. Beer, Christian & Ongena, Steven & Peter, Marcel, 2010. "Borrowing in foreign currency: Austrian households as carry traders," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2198-2211, September.
  2. Basil Guggenheim & Sébastien Philippe Kraenzlin & Silvio Schumacher, 2011. "Exploring an uncharted market: Evidence on the unsecured Swiss franc money market," Working Papers 2011-05, Swiss National Bank.
  3. Richard G. Anderson & Charles S. Gascon & Yang Liu, 2010. "Doubling your monetary base and surviving: some international experience," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 481-506.
  4. Joshua Aizenman & Gurnain Kaur Pasricha, 2009. "Selective Swap Arrangements and the Global Financial Crisis: Analysis and Interpretation," NBER Working Papers 14821, National Bureau of Economic Research, Inc.
  5. Brown, Martin & Ongena, Steven & Yesin, Pinar, 2009. "Foreign Currency Borrowing by Small Firms," CEPR Discussion Papers 7540, C.E.P.R. Discussion Papers.
  6. Richard G. Anderson, 2006. "Monetary base," Working Papers 2006-049, Federal Reserve Bank of St. Louis.
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Cited by:
  1. Raphael Auer & Sebastien Kraenzlin & David Liebeg, 2012. "How Do Austrian Banks Fund Their Swiss Franc Exposure?," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 24.
  2. Sébastien Philippe Kraenzlin & Thomas Nellen, 2012. "Access policy and money market segmentation," Working Papers 2012-12, Swiss National Bank.
  3. Michael D. Bordo & Owen Humpage & Anna J. Schwartz, 2012. "Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century," NBER Working Papers 17984, National Bureau of Economic Research, Inc.
  4. Sébastien Philippe Kraenzlin & Benedikt von Scarpatetti, 2011. "Bargaining Power in the Repo Market," Working Papers 2011-14, Swiss National Bank.

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