FRIDAY, JUNE 8, 2012

Eurozone citizens moving billions to Switzerland

Bloomberg/BW: - Switzerland saw its foreign currency reserves balloon by 66.2 billion Swiss francs ($69.5 billion) over the past month as the country's central bank spent heavily to prevent its currency from appreciating against the euro, according to data released Thursday.

The franc is considered a safe haven for investors concerned about the euro-zone debt crisis.

The Swiss National Bank held foreign currency reserves worth 303.8 billion francs in May, an increase of 28 percent from the 237.6 billion francs in April.

"A large part of the increase in foreign currency reserves between the end of April and the end of May can be traced to the purchase of foreign currency to enforce the minimum exchange rate," said SNB spokeswoman Silvia Oppliger.

Indeed we had a big spike in foreign currency reserves of the Swiss National Bank in May.

SNB foreign currency reserves (CHF MM)

And this was in fact caused by the SNB defending the 1.2 level on the EUR/CHF (euro/swiss) exchange rate - selling CHF and buying EUR (to keep CHF form appreciating too much). The reason the SNB had to do such a massive volume in FX transactions is that the euro area citizens are flooding Swiss banks with deposits (buying CHF and selling EUR). As Kostas Kalevras points out, the ECB's foreign reserve liabilities shot up €77.5bn in May to accommodate this transfer to Switzerland and to other non-euro countries. This confirms that not only do we have a run on periphery banks, with cash moving to Germany, but deposits are rapidly moving abroad as well. And Switzerland has become the main beneficiary (more on that later).

and.......

http://kkalev4economy.wordpress.com/2012/06/08/snb-increase-in-foreign-reserves/

SNB increase in foreign reserves

Ιουνίου 8, 2012 in central banking, english

The SNB released its foreign reserve data for May:

Foreign currency reserves increased from 237.6bn francs to 303.8bn. Presented in euros, May saw an increase of €55.2bn in SNB foreign currency holdings. If one takes a close look at ECB’s financial statements he ”ll find out that the entry ‘Liabilities to non-euro area residents denominated in euro’ increased from €77.5bn on May 4 to €116.4bn on June 1, a change of €38.9bn. Since the Fed-ECB currency swaps seem to have stabilized and the Swiss franc rate is close to the floor of 1.20 set by the SNB, this entry can act as a close proxy of capital flight towards Swiss banks. It’s rather obvious that things have turned negative since the start of May: