FT: Credit Suisse’s Zoltan Pozsar on the Swiss National Bank’s role in global bank funding

Why lenders are flocking to Bern and Zurich for dollars

The main reason why we think the SNB is being tapped is because the SNB’s collateral framework for U.S. dollar repo operations doesn’t apply any haircut to pledged collateral, only variation margin. No haircut on collateral for U.S. dollar repos makes the SNB unique among other central banks in Europe, as others usually haircut collateral — for example, the ECB charges 12%…

…In turn, haircuts could deter some banks from using their home central banks to raise U.S. dollars and make them tap the SNB instead.

The full article is available at https://www.ft.com/content/02022aab-d7c4-472c-8b88-5339d856ebd0

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