Will haven allure be enough to keep the franc attractive amid wealth tax?

The SNB tweaking its sight deposits rate threshold yesterday sees lenders start planning to charge wealthy clients for deposits

EUR/CHF D1 20-09

  • Credit Suisse will charge rich clients for Swiss franc deposits

It is being reported (⬆️) that Credit Suisse is looking to start charging for franc deposits after the SNB decision yesterday, following the footsteps of UBS who already said that it would introduce negative rates for clients holding more than 2 million francs in their accounts.

Essentially, the move is to try and mitigate the costs of deepening negative rates but at the same time it could hurt flows into the Swiss economy if big money funds aren't willing to pay the price for storing their money in the country.

The question that needs to be answered here is "are deeper negative rates going to push flows away from the franc?".

I reckon that is one markets need to balance out amid the global backdrop that is continuing to favour more defensive/safer assets. The franc is among one of those alongside the yen and gold to name a few of the obvious ones.

I reckon something between 0.1% to 0.4% would be a small price to pay if you look at the big picture and consider how global economic developments would be headed.

I mean it's not to say that there are many other attractive alternatives if you look across asset classes these days. Over ~$17 trillion worth of debt are negative yielding anyway.

The only fear is that the SNB may cut rates further and you'd be punished even more for keeping deposits in the country. But as mentioned, it could be a small price to pay in the long-run if you bank on the fact that the franc will appreciate amid haven demand.