Swiss National Bank (SNB) total sight deposits were CHF 442.5 billion for the week ending 20 June, compared to CHF 434.8 billion previously.

Domestic sight deposits increased to CHF 430.0 billion from CHF 426.7 billion the previous week.

Swiss Sight Deposits Update

The increase comes after two weeks of declines in sight deposits, maintaining levels seen in recent months. The SNB has recently implemented a tiered remuneration system for sight deposits.

This system discourages banks from storing excessive cash with the central bank by imposing penalties. The aim is to enhance liquidity within the Swiss money market.

What we see here is a short-term reversal in the trend of declining Swiss sight deposits. The data shows a jump in total sight deposits held at the Swiss National Bank (SNB), climbing back above CHF 442 billion following a couple of quieter weeks. Domestic deposits pushed higher too, suggesting renewed demand or strategic repositioning from the local banking sector.

The move higher may hint that institutions, particularly banks operating within Switzerland, are either less willing to lend in the short term or have chosen to hold back from deploying excess reserves elsewhere. This could mean they’re expecting either tighter financing conditions or reduced liquidity in markets we watch closely, especially given the SNB’s current stance.

Impact On Short Term Funding

The tiered interest mechanism remains in place. It’s a monetary tool designed to nudge banks away from hoarding balances at the SNB. By penalising certain tiers of these deposits, the idea is to release funds back into the broader money market and encourage more circulation across lending channels. That said, when we observe a rise in deposits despite the existence of that structure, it can reveal underlying caution or recalibration by liquidity providers.

The bounce in domestic balances might be temporary, especially if institutions took advantage of short-dated settlement windows, or perhaps pre-empted maturities elsewhere. But it may also signal the start of renewed caution following broader macroeconomic or geopolitical releases around the same time. Given that the SNB communicated clearly about its interest rate path and policy outlook throughout this month, residual reactions by banks might extend into early July.

From our perspective in the derivatives space, these flows matter because they impact the tone of short-term Swiss funding and forward pricing expectations. A deposit increase of this size, particularly after penalties are in place, means we may need to reassess forward CHF liquidity risks or possible fluctuations in repo demand.

With this shift still fresh and the SNB unlikely to move again in the immediate term, the mix of regulatory pressure and voluntary asset positioning provides clarity for short-dated pricing strategies. Spreads on Swiss franc interest rate products should be monitored closely. If counterparties begin more aggressively rotating out of deposits, it could temporarily weigh on implied volatility in front-end products.

In the days ahead, it may be worthwhile scrutinising any deviation in moving averages of domestic sight balances. Weekly fluctuations like these, when set against SNB policy signals, tend to be informative. Watch for any hard inflection—we’ll likely need to reset some convexity assumptions if balance behaviour begins shifting materially.

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