Schweizerische Nationalbank

New SNB Working Paper: Marius Faber and Gabriel Züllig estimate the slope of the Phillips curve in the euro area. They find that, although the Phillips curve is usually quite flat, it becomes substantially steeper when the labor market is tight. Abstract: We estimate the slope of the Phillips curve in the euro area, allowing for nonlinearities – or kinks – in the relationship between labor market slack and inflation. We exploit cross-country variation in labor market conditions in the period 2001-2024, absorbing aggregate shocks and endogenous monetary policy reactions with time fixed effects. We find that while the Phillips curve is usually quite flat, it becomes at least three times as steep if the labor market is sufficiently tight. This kink is more pronounced in the euro area than in the United States, potentially because of more rigid labor markets. Our estimates imply, however, that despite this nonlinearity, the majority of the post-Covid inflation surge was due to factors other than tight labor markets. https://lnkd.in/dWDE5j2Y

The Swiss National Bank is developing new banknotes – your opinion counts! In October 2024, the SNB announced that it was to begin developing its tenth banknote series. Over the last few months, twelve teams have participated in a competition and created designs for the new banknotes. The SNB invites you to give your opinion on the banknote designs. The theme of the new banknotes is ‘Switzerland and its altitudes’. It pays homage to the country’s unique topography, which extends from the Jura and the Central Plateau to the Alps. The new series aims to reflect the diversity of life in our country at the various altitudes. Link to the survey: www.newbanknoteseries.ch Further information about the new banknote series project is available on the SNB website: https://lnkd.in/dtYKCrUD

New SNB Working Paper: Daniele Ballinari and Jessica Maly fine-tune large language models (LLMs) in order to measure sentiment in the FX market. Their findings indicate that LLMs outperform existing methods for FX market sentiment analysis. Abstract: We enhance sentiment analysis in the foreign exchange (FX) market by fine-tuning large language models (LLMs) to better understand and interpret the complex language specific to FX markets. We build on existing methods by using state-of-the-art open source LLMs, fine-tuning them with labelled FX news articles and then comparing their performance against traditional approaches and alternative models. Furthermore, we tested these fine-tuned LLMs by creating investment strategies based on the sentiment they detect in FX analysis articles with the goal of demonstrating how well these strategies perform in real-world trading scenarios. Our findings indicate that the fine-tuned LLMs outperform the existing methods in terms of both the classification accuracy and trading performance, highlighting their potential for improving FX market sentiment analysis and investment decision-making. https://lnkd.in/dKD8UXB5

Swiss National Bank publishes banknote designs Public survey launched The Swiss National Bank is publishing twelve designs for the new banknote series and is launching a survey in which these can be evaluated by the public. The survey runs from 13 August 2025 until 7 September 2025 and is being conducted by an opinion polling company. The designs and the survey are available at www.newbanknoteseries.ch. The SNB thanks all the designers who submitted designs and interpreted the theme of the new banknote series, ‘Switzerland and its altitudes’, in such diverse and artistic ways. In the first phase of the competition, the designs will be evaluated by the public and by an advisory board of external experts. The six best designs will progress to the second phase of the competition, which will focus on potential cooperation and commercial aspects. The SNB will choose the winner of the design competition and announce its decision at the beginning of 2026. Link to the survey: www.newbanknoteseries.ch Further information about the new banknote series project is available on the SNB website: https://lnkd.in/dtYKCrUD

New SNB Working Paper: In a laboratory experiment, Hubert János Kiss, Alfonso Rosa Garcia and Lukas Voellmy evaluate the effectiveness of redemption fees and gates in reducing money market fund runs. Abstract: Liquidity management tools – such as redemption fees (which impose a cost on withdrawals) or gates (which suspend withdrawals when they become excessive) – are commonly used in the fund industry with the aim of mitigating run behavior and reducing fund fragility. Recent attention has been paid to the fact that these tools may give rise to preemptive runs, where investors withdraw preemptively to avoid the risk of being affected by temporary redemption restrictions. Since real-market testing is not feasible, we use laboratory experiments to evaluate the effectiveness of redemption fees and gates in reducing money market fund runs, in a setting where investors may withdraw preemptively. We find that fees significantly reduce the propensity to run compared to the baseline without liquidity management tools, whereas gates do not lower the propensity to run. However, the effect of fees on withdrawal behavior is relatively small and takes some time to materialize. Overall, our experimental results indicate that preemptive runs are a real concern and that liquidity management tools are unlikely to eliminate fund fragility, which is consistent with the experience of the 2020 money market fund turmoil. https://lnkd.in/dV-v6yqU

The Swiss National Bank in brief This brochure describes in concise form the SNB’s main tasks and activities as well as its legal basis and organisational structure. The publication is available in German, French, Italian and English. https://lnkd.in/dCUxDZms

New SNB Economic Note: Roman Baumann, Oliver Gloede, Damien Klossner and Christian Myohl describe how the SNB has implemented monetary policy in the money market in periods of negative, positive and zero policy rates. Abstract: This note describes how the Swiss National Bank has adapted its monetary policy implementation in the money market since 2015, across periods of negative, positive and zero policy rates. All three periods have been characterised by an environment with abundant sight deposits, i.e. banks have held considerably more sight deposits at the SNB than they need to settle payments or meet reserve requirements. In this context, remunerating sight deposits at the SNB policy rate has enabled the effective steering of money market interest rates, while applying different rates of interest to different portions of sight deposits – known as tiered remuneration – has supported money market activity. https://lnkd.in/dmqC6es7

New SNB Working Paper: Using a unique dataset of over 500 million anonymised card transactions, Laura Felber examines how exchange rate fluctuations affect cross-border shopping behaviour. Abstract: This paper examines the effects of exchange rate fluctuations on cross-border consumer spending in small open economies. Exploiting a large, unexpected and persistent central bank-induced exchange rate appreciation and drawing on a unique dataset of over 500 million anonymized debit and credit card transactions, I document a substantial and immediate impact on both cross-border shopping by domestic consumers and tourism spending by foreign consumers. The strongest spending adjustments are observed among domestic consumers living near the border and foreign consumers from neighboring countries. Furthermore, foreign consumers from neighboring countries exhibit high exchange rate sensitivity on both the extensive and intensive margins and shift their consumption from higher- to lower-value goods and services. These findings suggest significant substitution effects in consumption on impact and emphasize the important role of cross-border shopping in small open economies. The paper provides insights for policymakers and central bankers, especially in small open economies where the exchange rate channel is an important channel of monetary policy transmission. https://lnkd.in/dhdzGvcG

New SNB Working Paper: Using a unique dataset for Switzerland, Miriam Koomen (Miriam K.) and Laurence Wicht show that idiosyncratic firm-level shocks shape current account fluctuations. Abstract: We present new empirical evidence on the role of granularity in the current account (CA), using a unique and comprehensive firm-level dataset for Switzerland. We show that idiosyncratic shocks to large firms account for almost two thirds of the fluctuations in the headline CA and are the primary source of CA volatility. The granular effect is present across goods, services, and income components and persists over both short- and medium-term horizons. In addition to their direct impact, idiosyncratic shocks propagate through inter-firm linkages via input-output relationships and cross-product connections associated with multinational enterprise activity. Our findings challenge standard macroeconomic models that emphasize aggregate fundamentals, highlighting the importance of firm-level heterogeneity in explaining external imbalances and their fluctuations. https://lnkd.in/dMf9vS9C

📢 We are pleased to announce that Antoine Martin, Vice Chairman of the Governing Board of the Swiss National Bank, and Marja Nykänen, Deputy Governor at the Bank of Finland (Suomen Pankki - Finlands Bank), have been appointed Co-Chairs of the FSB Regional Consultative Group (RCG) for Europe. Their appointment is for a two-year term, starting on 1 July 2025. Read more about our new RCG Europe Co-Chairs ⤵️ ▶️ Antoine Martin: https://lnkd.in/enQHyDPa ▶️ Marja Nykänen: https://lnkd.in/eWaZvMSc ℹ️ Did you know? The FSB Regional Consultative Groups provide a structured mechanism for: 🔹 facilitating interaction of FSB members with non-members regarding the various FSB initiatives underway and planned; 🔹 promoting implementation within the region of international financial policy initiatives; and 🔹 enabling regional group members to share amongst themselves and with the FSB their views on vulnerabilities affecting the financial system, on FSB initiatives and on other measures that could be taken to promote financial stability. Find out who is represented in the FSB’s RCG Europe: https://lnkd.in/e9F-_sJF