Swiss National Bank raises interest rates despite crisis

In Switzerland, which is facing the biggest banking crisis in its history, there was no step back in the path of monetary tightening. The Swiss National Bank increased its policy rate by 50 basis points in line with expectations. Following the Fed, the Swiss National Bank also came out of the meeting it had held under the shadow of the banking crisis with a decision to increase interest rates. The bank increased its policy rate by 50 basis points to 1.50 percent. Economists participating in the Bloomberg survey also expected the interest rate to be increased by 50 basis points. Due to the crisis experienced at the long-established Swiss bank Credit Suisse, the Swiss National Bank also stepped in and opened a $54 billion credit line to the bank. Another long-established bank, UBS, stepped in during the ongoing crisis and agreed to take over Credit Suisse with a historic acquisition. It was stated that UBS would pay 3 billion Swiss Francs ($3.3 billion) to acquire its competitor. The Swiss National Bank agreed to provide a liquidity line of 100 billion Francs to UBS as part of the agreement. The Swiss government also announced that UBS would be guaranteed 9 billion francs for potential losses from the takeover. Swiss banking authority Finma said that 16 billion francs worth of risky Credit Suisse bonds would be worthless after the deal.