IDEAS home Printed from https://ideas.repec.org/a/onb/oenbfs/y2012i24b1.html
   My bibliography  Save this article

How Do Austrian Banks Fund Their Swiss Franc Exposure?

Author

Listed:
  • Raphael Auer

    () (International Trade and Capital Flows Unit)

  • Sebastien Kraenzlin

    () (Money Market Unit)

  • David Liebeg

    () (Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division)

Abstract

Austrian banks have traditionally issued large volumes of Swiss franc-denominated loans. Although new issuance has virtually stopped since 2008, the outstanding volume (CHF 81 billion at mid-2012) will continue to pose a challenge to financial stability at least in the coming decade. This study examines how Austrian banks have refinanced their Swiss franc positions and how this changed with the onset of the financial crisis. We document the importance and evolution of three main funding sources: (1) the secured and unsecured interbank money market, (2) Swiss franc-denominated bond issuances, and (3) central bank financing operations. Our findings are that while activity in the unsecured money market almost came to a halt around the collapse of Lehman brothers and the issuance of Swiss franc-denominated bonds also decreased, the cross-border repo market proved resilient. Moreover, an important role in dealing with the funding drought was played by central bank operations, namely repo operations by the Swiss National Bank (SNB) and swap facilities provided by the SNB and the ECB.

Suggested Citation

  • 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, pages 54-61.
  • Handle: RePEc:onb:oenbfs:y:2012:i:24:b:1
    as

    Download full text from publisher

    File URL: https://www.oenb.at/dam/jcr:e8b9922e-ddb0-458b-99b0-25bc730e4a9d/fsr_24_special_topics_01_tcm16-252039.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kraenzlin, Sébastien & Nellen, Thomas, 2015. "Access policy and money market segmentation," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 1-12.
    2. Raphael Auer & Sébastien Kraenzlin, 2011. "International liquidity provision during the financial crisis: a view from Switzerland," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 409-418.
    3. Sébastien Philippe Kraenzlin & Benedikt von Scarpatetti, 2011. "Bargaining Power in the Repo Market," Working Papers 2011-14, Swiss National Bank.
    4. 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.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alin Marius Andries & Andreas M. Fischer & Pinar Yesin, 2015. "The impact of international swap lines on stock returns of banks in emerging markets," Working Papers 16.01, Swiss National Bank, Study Center Gerzensee.
    2. Krogstrup, Signe & Tille, Cédric, 2015. "On the roles of different foreign currencies in European bank lending," CEPR Discussion Papers 10845, C.E.P.R. Discussion Papers.
    3. Kraenzlin, Sébastien & Nellen, Thomas, 2015. "Access policy and money market segmentation," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 1-12.

    More about this item

    Keywords

    foreign currency loan; banking supervision; banking sector stability; lender of last resort; refinancing; interbank market;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:onb:oenbfs:y:2012:i:24:b:1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stefan W. Schmitz). General contact details of provider: http://edirc.repec.org/data/oenbbat.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.