The Swiss National Bank has a problem. He thought 1000 notes were important for expensive purchases. Instead, it is piled up. Up to nine out of ten thousand become bunkers. That presents a problem for the National Bank.
Swiss 1000 banknotes are the most valuable banknotes in the world, circulated by the central bank and used regularly in everyday life. In particular, however, the prevailing low interest rates call many people to hoard money at home in thousands rather than leave it in a bank account.
Flowers, strong francs, tax evasion, money laundering or an easier business for criminals: possible reasons. But for the Swiss National Bank (SNB), "Ameisli" stockpiling is a growing problem. SNB President Thomas Jordan (56) strongly emphasized that further interest rate cuts are possible. Even though savers are rich and not only large investors are charged with penalty interest, many of them withdraw their money from the bank and hoard it at home.
According to bunkering, the new SNB study is by far the most important reason why 1000-notes have been used. Most of the paper money is hoarded in 2017, according to the SNB working paper "Demand for Swiss Banknotes: Some New Findings". The authors have calculated "hoarding percentages between 80 and 90 percent" for the 1000 mark.
More than double the hoard in 1970
In other words, 48 million records of 1000s circulated. Of these, more than 40 million Nötli bunkers. This means that about 60 percent of the value of all outstanding Swiss banknotes is circulating, but hidden somewhere in a safe place: 45 billion francs, buried in a safe, under a mattress, somewhere in the park. Therefore, there have never been thousands of bills stored in Switzerland like in the past few years. In 1970 it was only about 40 percent of the value of thousands.
This is the amount of giant money withdrawn from circulation, which at the same time threatens to damage the National Bank's interest rate policy. Because increasing demand for coveted values can have an impact on negative interest rates. If more cash is not needed, the expected effect of a reduction in interest rates can be avoided.
The SNB study does not say whether or how criminals hoard thousands of dollars. But it is very surprising that valuable notes disappear, especially in a crisis with increasing uncertainty from the economic cycle. The lower the rate cut or the stronger the franc appreciates, the greater the demand for the 1000s. (KES)