SNB may react to ECB measure

The SNB will try to take advantage of recent CHF REER depreciation. Hence, the Bank may react to the ECB's additional stimulus. 

An immediate response from the SNB is anticipated in the form of the removal of all exemptions on domestic banks sight deposits That is likely to make a negative effect on the CHF, says Barclays.

The SNB is expected to use its 'nuclear' option that has increased in introducing negative rates by a small Swiss bank. Swiss Alternative Bank Schweiz (ABS) is charging -0.125% on amounts up to CHF100K and -0.75% on amounts above CHF100K for small individual current accounts. 

"The move highlights the pressure that SNB's policies are exerting on smaller banks, putting them at a disadvantage relative to their larger, multinational competitors and possibly exposing them to deposit flight if the larger banks do not follow suit. We expect a broad-based shift to negative rates on retail deposits to lead to substantial CHF selling, raising jump risks for EURCHF", added Barclays.