"The floor rate will remain in force as long as necessary to carry out our mandate of maintaining price stability "
- SNB governing board member Fritz Zurbruegg
The amount of cash held by the nation's commercial banks and the central bank inched higher last week, adding to signs that investors are getting less anxious over the Eurozone's financial woes. Sight deposits of domestic banks, which constitute a huge part of the liquidity in the banking sector, jumped to 280 967 million francs in the week ending May 24, up from 278 637 a week earlier. As the Swiss Franc was approaching parity versus the shared currency in August 2011, the SNB decided to flood the money market with cash and pushed total sight deposits to 200 billion, introducing a cap on Euro a month later.
Last week, the SNB's President Thomas Jordan claimed his readiness to introduce a shift of the cap on the Franc and even plan to implement negative interest rate, as the Swiss Franc is heading to break through 1.26 per Euro for the first time in more than two years. As the central bank is trying to prevent the deflation within the country and boost economic growth, it has already massed 433.6 billion francs ($447 billion) of foreign currency, figure which is close to three quarters of annual economic output. This fact has raised questions of how the SNB might invest the money.
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