The first shot in the War on Cash?

A small Swiss bank has become the first retail bank in the world to charge ordinary customers negative interest on their cash deposits.

A small Swiss bank has become the first retail bank in the world to charge ordinary customers negative interest on their cash deposits.

From next year, Alternative Bank Schweiz (ABS) will charge current account holders 0.125% a year to hold money with it, while those who have more than CHF100,000 (around £65,000) will have to pay 0.75%.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

ABS argues that it needs to do this because the Swiss central bank (the Swiss NationalBank) is charging it 0.75% to deposit money. Central banks in Denmark and Sweden have also set negative deposit rates, as has the European Central Bank (ECB).

The idea behind negative rates is to encourage people and firms to go out and spend, rather than pay the penalty for saving. So far, other Swiss banks have avoided passing negative rates onto their retail customers directly (though some levy negative rates for large clients). Instead, they have increased account management charges (Swiss banks do not provide "free" banking) or absorbed the losses directly. However, ABS which funds "ethical" projects argues that negative interest rates are more honest.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Most Popular

Personal finance

How much the state pension will rise by this year

While Boris Johnson promised to hold a full budget within 100 days of his election victory, many of the details of next year’s state pension increases…
10 Jan 2020

Currency Corner: how high can the pound go against the euro in 2020?

In the month in which we should finally leave the European Union, Dominic Frisby takes a look at the pound vs the euro and asks just how high sterling…
13 Jan 2020

Where will markets be in 2030? Here are 20 forecasts for the 2020s

A lot has changed in the last ten years – stockmarkets soared, technology transformed our lives and politics has changed beyond measure. Here, Dominic…
14 Jan 2020
Investment strategy

Running with the crowd is bad for your finances – here’s how to resist it

To be a good contrarian investor, you have to avoid being swayed by the crowd. John Stepek explains how to go about it.
3 Jan 2020