Swiss Financial System
Foreign-Currency Liquidity in Switzerland
Foreign-Currency Liquidity in Switzerland describes a cross-border funding or foreign-exchange channel through which Swiss-franc liquidity, hedging demand and global balance sheets interact.
Definition
Foreign-Currency Liquidity in Switzerland describes a cross-border funding or foreign-exchange channel through which Swiss-franc liquidity, hedging demand and global balance sheets interact.
Funding mechanism
Banks and investors can obtain currency exposure through cash FX, swaps, cross-currency swaps or offshore borrowing. Hedging demand and balance-sheet constraints can therefore move funding costs even when domestic policy is unchanged.
Market relevance
The channel connects CHF rates to global dollar and euro funding conditions. Stress can appear in basis spreads, swap pricing or franc appreciation before it is visible in domestic credit data.
What to monitor
Follow cross-currency basis, FX swaps, CHF spot and forwards, global funding stress and SNB liquidity measures. Distinguish directional currency demand from the cost of funding the currency.