Collateral rules shape bank liquidity and money market flows
Petra Tschudin and Thomas Moser of the Swiss National Bank (SNB) explained how collateral rules govern central bank liquidity provision. Those rules also shape liquidity redistribution between banks in the money market.
Collateral at the liquidity gate
The SNB provides central bank liquidity to the financial system as part of its statutory tasks and always requires collateral in return.
That collateral must meet requirements established in the bank's collateral policy.
Governing Board Member Petra Tschudin and Alternate Member Thomas Moser presented this framework at the SNB's Money Market Event in Geneva on October 29, 2026.
They described collateral policy as a technical aspect of the Swiss financial system that connects market participants' day-to-day work with the central bank's responsibilities.
Their introduction focused on the rules governing the collateral backing the SNB's liquidity provision.
Rules reach beyond the SNB
The speakers described two channels through which collateral policy affects the Swiss financial system: the SNB's own provision of liquidity and its redistribution between banks in the money market.
The requirements therefore concern both central bank operations and interbank activity.
The Bank for International Settlements (BIS), which hosts the speech, states that the views expressed belong to the speakers and do not necessarily reflect those of the BIS.
One framework, two channels
Collateral policy connects the SNB's liquidity provision with redistribution between banks.
Its reach therefore extends beyond the transactions in which the central bank supplies funds.
The introduction identifies that connection but does not specify collateral eligibility criteria.