First, the current Swiss regime of mortgage credit being intermediated by banks, themselves largely financed through sight deposits
, is vulnerable to competitive forces, in particular to the arrival of new entrants offering mortgages with direct market funding.
It has also proved necessary for banks to have a certain buffer--in other words, banks' aggregate sight deposits
must be of a certain size after Norges Bank has supplied liquidity through monetary policy operations.
The own yield on notes and coins and non-interest bearing sight deposits
is taken to be zero, while the three-month CD rate and the National Savings investment account rate are used as the own yields for CDs and National Savings respectively.
A further drop in minimum reserves comes into force: for sight deposits
by 2 percentage points to 5 per cent, for short-term time and savings deposits by 2.
The banks' sight deposits
held with the SNB fell sharply at the beginning of 1995 and recovered only a little until the summer of 1995.
Currently, the reserve restaurant on sight deposits
in foreign currency is 17.
By providing and absorbing liquidity by means of fixed-rate loans and deposits (see separate box for definition), Norges Bank ensures that at the end of each day the banking system has sight deposits
of the order of NOK 5-12 billion in Norges Bank.
Another problem was that the transaction accounts were not recorded by commercial banks in a uniform way; some banks considered them sight deposits
and others savings deposits, and recording practices by individual banks varied over the years.
Money supply continued to see a seasonal contraction on large withdrawals in mostly sight deposits
4 %) or 72,924 dinars, in sight deposits
(17,752 dinars) and savings accounts (34.
Overnight loans 44 -110 Fixed-rate loans 4 652 13 499 Other central bank financing 8 497 648 Total reserves -4 965 25 638 Of which: Sight deposits
with Norges Bank -4 965 25 638 Short-term Treasury notes 0 0 Other reserves (estimate) 0 0 // 1/1-29/2 Supply+/withdrawal- 1999 2000 Central govt.
5 per cent while the banks' sight deposits
edged up by 4 per cent, the first positive rate of growth since 1987.