Switzerland's central bank said on Thursday it would introduce negative interest rates for the first time in decades to stop the franc getting any stronger, after the Russian ruble crisis sent investors scurrying to the safe haven currency.
The Swiss National Bank will impose a rate of -0.25 percent on certain bank deposits on January 22, with the aim of pushing the target range of Switzerland's benchmark interest rate into negative territory.
"The Swiss franc has been experiencing renewed upward pressure vis-à-vis the euro in the last few days," said Thomas Jordan, chairman of the SNB governing board.
"Rapidly mounting uncertainty on the financial markets has substantially increased demand for safe investments. The worsening of the crisis in Russia was a major contributory factor in this development."
The ruble crashed to historic lows this week of 80 to the dollar and 100 to the euro, as the energy-export dependent economy was hit by a rout in oil prices.
With the safe haven Swiss currency in demand, the SNB was forced to take action to protect the country's vital export sector.