Swiss Financial System
SARON vs SNB Policy Rate
SARON and the SNB policy rate are closely linked but not identical: one is a market rate in secured overnight funding, the other is the central bank’s policy signal.
Definition
SARON and the SNB policy rate are closely linked but not identical: one is a market rate in secured overnight funding, the other is the central bank’s policy signal.
Mechanism
The rate originates in the secured CHF money market rather than an unsecured bank panel. Daily observations are aggregated or compounded according to the relevant SIX methodology and contract convention.
Market relevance
Changes in SARON transmit quickly into floating-rate funding, derivatives and SARON-linked mortgages. The spread to the SNB policy rate also reveals conditions in secured franc liquidity.
What to monitor
Watch the SNB policy rate, repo-market conditions, fixing and compounding conventions, reset dates and the contractual margin charged above the reference rate.