tag:blogger.com,1999:blog-6704573462403312459.post588982965559996501..comments2024-03-28T06:53:23.473-04:00Comments on Moneyness: The ZLB and the impending race into Swiss CHF1000 bank notesJP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-6704573462403312459.post-67011872466850208572015-03-24T19:17:23.546-04:002015-03-24T19:17:23.546-04:00The source of the graph is me, the data comes from...The source of the graph is me, the data comes from the Swiss National Bank. 60% of the total value of fanc banknotes are 1000 CHF notes, not 60% of the quantity.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-1474607636139030842015-03-24T18:35:00.059-04:002015-03-24T18:35:00.059-04:00Here I find a confirmation about 60% but not of nu...Here I find a confirmation about 60% but not of number of banknotes, but % of banknote's value: http://www.swissinfo.ch/ita/la-faccia-nascosta-dei-biglietti-da-1-000-franchi/36434734Gianohttps://www.blogger.com/profile/10755205263183280961noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-64977277043010298102015-03-24T18:32:49.639-04:002015-03-24T18:32:49.639-04:00Image source?
Did I get it right? 60% of total fra...Image source?<br />Did I get it right? 60% of total francs banknote are 1000CHF? (So, just to double check total CHF are 40000/60*100=66billion CHF)<br /><br />That graphs seems to doesn't fit with this: https://twitter.com/jp_koning/status/578558057057239040/photo/1<br /><br />And one there is no source the result it's always confusion...Gianohttps://www.blogger.com/profile/10755205263183280961noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-86164302300643263242015-02-02T11:11:33.294-05:002015-02-02T11:11:33.294-05:00I think the "% of notes" in the figure s...I think the "% of notes" in the figure should be read as the fraction of the total number of notes, and not the % of the total value of the notes. From memory I recall that more than 90 % of the total value of Swiss notes are SFR 1000 notes.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-38149823150577777352015-01-18T11:56:05.450-05:002015-01-18T11:56:05.450-05:00...and this is the Swiss we are talking about, can......and this is the Swiss we are talking about, can you imagine what the Euro has in store for it? Wait till the ECB formally announces it's next monetization program.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-6667972592750285092015-01-17T21:01:55.341-05:002015-01-17T21:01:55.341-05:00Regarding the cash storage problem, it seems prude...Regarding the cash storage problem, it seems prudent to invest in a wheelbarrow business.Geoffnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-3829531992545348382015-01-17T20:21:33.111-05:002015-01-17T20:21:33.111-05:00There's a certain irony associated with the me...There's a certain irony associated with the mention of "cash storage problems" that reminds me of Weimar.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-66394374964460314552015-01-17T18:07:01.897-05:002015-01-17T18:07:01.897-05:00You're right, it's an elephant in the room...You're right, it's an elephant in the room. I haven't heard the SNB or the ECB talk at all about this issue. But I'm sure they're closely monitoring the demand for the CHF 1000.<br /><br />Here's a report by Willem Buiter that mentions that cash storage problem and the CHF 1000 notes:<br /><br />https://ir.citi.com/Yl66z2bHG4a4S4eti8cL4Xz0biFyK%2BxJEvb0dPUomNRwNbvF%2F2Ti2g%3D%3DJP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-861884254161148092015-01-17T15:35:46.353-05:002015-01-17T15:35:46.353-05:00Good post. Given that this is an unavoidable eleme...Good post. Given that this is an unavoidable element of monetary policy in such circumstances, I wonder if any of the central banks of the involved countries has opined on this in official releases (or recent papers)? It is a risk of sorts that they should have anticipated in their thinking. Surely it needs to be addressed as part of a coherent strategy for negative interest rates. It would seem to be an elephant in the room otherwise. JKHhttps://www.blogger.com/profile/06322177539880818556noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-47684706940595748242015-01-17T12:44:07.330-05:002015-01-17T12:44:07.330-05:00" substantial portion of this must be foreign..." substantial portion of this must be foreign held so they must also consider exchange rate changes now that it is no longer pegged. "<br /><br />That misses the point, since the arbitrage here is between Swiss CHF cash vs Swiss CHF deposits. Both are subject to the exact exchange rate risk.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-54658852385497537742015-01-17T12:42:01.519-05:002015-01-17T12:42:01.519-05:00The SNB can officially demonetize by forcing every...The SNB can officially demonetize by forcing everyone to turn 1000s in for five 200s. After 30-days, say, 1000s will be invalid for trade and unredeemable by banks or the government.<br /><br />Or it can unofficially demonetize by no longer printing 1000s. Banks cease providing depositors with 1000 CHF notes because the banks will have quickly run out, however notes can still be deposited at banks for 1000 CHF in deposits. No one will do so since this undervalues the 1000 note. So the 1000 note will disappear, flushed into the black market or under people's beds. JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-89450859773932360132015-01-17T12:29:01.289-05:002015-01-17T12:29:01.289-05:00Because paying the government's bill is probab...Because paying the government's bill is probably illegal, whereas reducing rates deep into negative territory and then altering the SNB's cash policy via any of the strategies mentioned in this post is well within the SNB's remit.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-32245661274009977852015-01-17T10:48:04.686-05:002015-01-17T10:48:04.686-05:00Assuming that "demonetization" is define...Assuming that "demonetization" is defined as making large notes invalid for public trade, but still be redeemable at full value by banks or the government?sticklerhttps://www.blogger.com/profile/11468746880489986775noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-37945907174880785592015-01-17T07:32:56.238-05:002015-01-17T07:32:56.238-05:00And why not just a more classic "print money&...And why not just a more classic "print money"? Have 10-20% of the gov'ts monthly pay be newly printed money (out of thin air!). If there's a surplus, reduce tax rates to have a monetized deficit, until 2% inflation is again achieved.Tom Greyhttps://www.blogger.com/profile/15046612425809449502noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-45667483065700688252015-01-16T13:53:18.047-05:002015-01-16T13:53:18.047-05:00A substantial portion of this must be foreign held...A substantial portion of this must be foreign held so they must also consider exchange rate changes now that it is no longer pegged. Swiss euro euro accounts may become attractive saving both banks and customers the grief if that is their main use. A safe deposit box may become highly sought after and the conversion and storage may become a valuable bank service. Lordhttps://www.blogger.com/profile/06747994571555237739noreply@blogger.com