As of the week ending March 28, total sight deposits at the Swiss National Bank (SNB) reached CHF 451.2 billion, an increase from CHF 449.2 billion the previous week. Domestic sight deposits also rose to CHF 441.7 billion, compared to CHF 440.4 billion earlier.
Swiss sight deposits experienced a mild increase during the past week, corresponding with a small rise observed in March. Overall, the trend in sight deposits has remained fairly steady in recent months.
Subtle Shift In Liquidity Positioning
This recent uptick in Swiss sight deposits—albeit modest—signals a mild shift in liquidity positioning among domestic financial institutions. By ending March with CHF 451.2 billion held at the Swiss National Bank, up from CHF 449.2 billion the week before, there is evidence of a slight build-up in reserves. Most of this movement came from domestic entities, whose own deposits edged up by CHF 1.3 billion over the same period.
Sight deposits are one of the more immediate forms of liquidity at banks’ disposal. They function as an indication of system-wide cash positioning and can fluctuate according to several factors—ranging from regulatory considerations and market sentiment to longer-term shifts in interest policy views. When domestic banks increase these balances, it is not usually in anticipation of imminent rate cuts, but rather a reflection of positioning around near-term credit stability and central bank action, or more accurately, inaction.
The stability observed in these balances over recent months suggests that markets are not pricing abrupt policy moves ahead; the build-up seen last week doesn’t yet break from that broader pattern. Instead, we might view it as a subtle hedge or preparation phase aligned with the SNB’s prior stance. Jordan’s recent remarks on policy being data-driven—and the importance of real exchange rates—add weight to this interpretation.
That said, last week right after Jordan’s comments, the Franc saw modest appreciation, though market reaction remained firmly within prior ranges. Meaningful directional views on CHF have not yet developed broad momentum, which can be interpreted as the underlying expectations around central policy remaining largely unchanged.
Expectations Of Continued Stability
In light of this, over the next fortnight or so, we are likely to see short-dated volatility compress further unless new macroeconomic triggers emerge. Traders who are accustomed to acting quickly on central bank statements would do well to avoid over-reading such a deposit move. What the data shows isn’t a directional impulse, but rather a continuation of cautious posturing.
As a result, we may observe swap spreads retaining their tight ranges, with cross-currency basis levels also holding firm, particularly given the low drive for speculative flows through CHF positions. Option pricing remains indifferent, especially on front-end tenors. Observing how volumes shift around month-end and the first few data prints into April will be more telling than last week’s marginal rise in cash reserves at the central bank.
Given these dynamics, skew on CHF pairs continues to favour calm over turbulence. Those monitoring carry and volatility structures should keep assessing front-month implieds versus realised movement before repositioning. The opportunity remains—in quiet data weeks—for well-timed short gamma positions, but timing needs to be clean and underpinned by upcoming macro releases, not past liquidity changes.
We will remain alert to any shift in communication patterns from Zurich—particularly statement tone—and watch for any impact on correlated markets like EUR/CHF or CHF/JPY, where orderbooks have thinned somewhat, potentially allowing sharper moves should sentiment adjust. Until then, the prudent path is to assume stability until evidence suggests otherwise.
