The Swiss Bankers Association said negative interest rates should be removed as the country has now recovered from the Swiss franc shock and their persistence could hamper the economy.
According to a study by the body, the Swiss National Bank should move toward exiting "crisis mode" because negative interest rates no longer satisfy their economic purpose after roughly five years. The Swiss franc is no longer overvalued and prices are already stable, the study said.
The central bank introduced a negative 0.25% interest rate on sight deposit balances toward the end of 2014. During its Sept. 19, 2019, monetary policy committee, the central bank held the rate at negative 0.75% and increased the threshold for bank deposits exempt from negative rates.
The results of the study said in the long term, negative rates will penalize savers and create strong incentives for greater debt, with indebtedness rising "substantially" since the financial crisis. It also noted that negative rates weigh on banks' profitability as they paid CHF2 billion in 2019 in negative rates.
"Negative interest rates must remain an extraordinary monetary policy measure and must not become the norm," it added.
The SNB's next monetary policy assessment is scheduled for Dec. 12.