International liquidity provision during the financial crisis: a view from Switzerland

The authors document the provision of liquidity in Swiss francs (CHF) by the Swiss National Bank (SNB) to banks located outside Switzerland during the recent financial crisis. What makes the Swiss case special is the size of this liquidity provision—at times, 80 percent of all short-term CHF liquidity provided by the SNB—and the measures adopted to distribute this liquidity. In addition to making CHF available to other central banks via swap facilities, the SNB also allows banks outside Switzerland to directly participate in its repurchase agreement transactions. Although this policy was adopted for reasons predating the 2007-09 financial crisis, it proved tremendously helpful during the crisis by providing the European banking system direct access to the primary funding facility for CHF.Liquidity (Economics) ; Financial crises ; Switzerland

Daytime is money

Based on real-time trade data from the Swiss franc overnight interbank repo market and SIX Interbank Clearing (SIC) - the Swiss real-time gross settlement (RTGS) system - we are able to gain valuable insights on the daytime value of money and its determinants: First, an implicit hourly interbank interest rate can be derived from the intraday term structure of the overnight rate. We thereby provide evidence that an implicit intraday money market exists. Second, we show that after the introduction of the foreign exchange settlement system CLS the value of intraday liquidity has increased during the hours of the CLS settlement cycle. Third, the turnover as well as the liquidity in SIC influence the intraday rate correspondingly. These facts provide evidence for the cost of immediacy. Features like RTGS, delivery-versus-payment and payment-versus-payment substitute credit risk with liquidity risk which in turn increases the value of intraday liquidity. The analysis is central bank policy relevant insofar as different designs of intraday liquidity facilities and different collateral policies result in different intraday term structures for the overnight money market.interbank money market, intraday credit, term structure

Bidding Behavior in the SNB's Repo Auctions

The Swiss National Bank (SNB) provides reserves to market participants via fixed rate tender auctions. We analyze the banks' bidding behavior and identify the determinants for the decision to participate as well as on the amount to tender. Therefore, we estimate bidding functions for banks which participate regularly in the SNB's auctions. We find that a bank's bids from the previous day and the amount of maturing repo operations with the SNB have for most banks a significant effect. The autonomous factors (government balances at the SNB and currency in circulation) are of only minor importance. A further determinant of the bidding behavior is the attractiveness of the SNB's auction rate compared to the prevailing interbank market repo rate. The spread of unsecured and repo rates as well as the attractiveness of funding Euros indirectly via a Swiss franc repo transaction with the SNB are only for few banks significant. Further, the question is addressed whether the bidding behavior changed in the financial market crisis of 2007/2008. There is little evidence of a systematic change in bidding behavior in the crisis. This results from the fact that the SNB has addressed the volatile demand for reserves in the crisis with overnight fine-tuning operations.Open Market Operations, Bidding Behavior, FixedRate Tender Auction, Repo, Switzerland

The characteristics and development of the Swiss franc repurchase agreement market

With the reinterpretation of repurchase agreements (repos) by the tax authority and the revision of the national bank law in 1997, allowing the Swiss national bank (SNB) to use repos as monetary policy instrument, the prerequisites for the development of a Swiss franc repo market were given. The development of the repo market in Switzerland only came up in 1999 with the provision of an integrated trading and settlement system provided by SegaInterSettle AG (SIS), Eurex and Swiss Interbank Clearing (SIC) in collaboration with the SNB. The following paper provides an overview of the basic characteristics and structure of the Swiss franc repo market as well as of the development it has undergone since 1999. It also discusses what motives and reasons the banks possess to actively participate in the Swiss franc repo marke

Impact of bisphosphonate wash-out prior to teriparatide therapy in clinical practice

Concurrent use of bisphosphonate therapy reduces the anabolic effect of teriparatide. Consequently, in clinical practice bisphosphonates are discontinued and teriparatide therapy held for a few months to allow bone turnover to increase. We aimed to evaluate the effect of prior bisphosphonate exposure and the effect of bisphosphonate wash-out on the treatment response to teriparatide. Thirty-nine patients with primary osteoporosis (mean age 63.6±14.0years), including 26 patients previously treated with oral bisphosphonates (median duration 53months) and 13 bisphosphonate-naïve patients were started on teriparatide (20μg daily) and followed prospectively over 12months. The primary study outcome was change in bone formation markers (PINP, bone ALP, osteocalcin). Secondary outcomes included changes in bone resorption (βCTX) and 12-month changes in BMD. Markers of bone formation increased early during teriparatide therapy and were followed by an increase in βCTX (p<0.001). The magnitude of the increase in bone markers was comparable in both patient groups irrespective of prior bisphosphonate exposure; similarly, increases in BMD after 12months were not significantly different between bisphosphonate-pretreated and bisphosphonate-naïve patients (lumbar spine 7.1 vs. 8.9%, p=0.58; total hip 4.1 vs. 1.1%, p=0.48). The response of teriparatide was not related to the duration of bisphosphonate wash-out (median duration 4.2months). This study confirms that beneficial effects of teriparatide on intermediate bone endpoints can be translated into clinical practice with less constringent methodological circumstances than in RCTs. Furthermore, as bisphosphonate wash-out does not appear to influence the treatment effect, teriparatide therapy can be started immediately after ceasing bisphosphonate therapy and wash-ou

Exploring an uncharted market: Evidence on the unsecured Swiss franc money market

To date, various central banks have lacked detailed statistical evidence on developments in the unsecured interbank money market. Furfine (1999) introduced the idea of calculating unsecured overnight interbank lending by using data of a RTGS system. Based on data from the Swiss payment system (SIC) we developed an algorithm to identify unsecured interbank loans in Swiss francs. In contrast to Furfine (1999) we also identify longer-term transactions. We thereby gain a deeper insight on the size and structure of the unsecured interbank money market in Swiss francs. This is the first time that SIC data have been used to identify transactions and market rates in the unsecured Swiss franc money market. Overall, the estimates show that after the collapse of Lehman Brothers loss of confidence led to a freezing-up of the market for several months and a decrease in daily turnover.unsecured interbank money market, development, money market turmoil, financial stability, Switzerland

Possible beneficial effect of bisphosphonates in osteonecrosis of the knee

Osteonecrosis (ON) in the knee occurs as a localized inflammatory disease in relation to spontaneous or non-traumatic ON. Conservative treatment possibilities are limited, and prognosis appears to be poor; in most cases, ON results in knee arthroplasty. Bisphosphonates are suggested to prevent bone resorption and collapse of necrotic bone. In this observational, prospective study we investigated the effect of bisphosphonate treatment in patients with spontaneous or arthroscopy-induced ON of the knee. Twenty-eight patients with osteonecrotic lesions and bone marrow oedema in the knee were included. In 22 patients (80%), ON was identified after arthroscopic surgery of the knee; six patients were diagnosed with spontaneous ON. Patients were initially given pamidronate 120mg i.v. divided in 3-4 perfusions over 2weeks, followed by oral bisphosphonate treatment with alendronate 70mg weekly for 4-6months. Bisphosphonate treatment resulted in a rapid pain relief, VAS decreasing from 8.2±1.2 at baseline to 5.02±0.6 after 4-6weeks (p<0.001). After 6months, the VAS decreased by 80% (p<0.001). At the 6-month follow-up, symptoms had resolved completely in 15 patients out of 28; in 6 patients, minimal symptoms (VAS 1-2) remained. In two patients, treatment effect was unsatisfactory, and surgical intervention was needed (arthroplasty). Bone marrow oedema on MRI resolved completely in 18 patients out of 28 with substantial reduction in the remaining. Furthermore, osteonecrotic area resolved completely or demarcation with sclerotic changes of the necrotic area could be observed. Bisphosphonate treatment in patients with osteonecrosis of the knee was associated with a rapid improvement in pain score and radiological consolidation of the area of osteonecrosis. Further randomized, controlled trials are warranted to confirm the potential beneficial role of bisphosphonates in the treatment of osteonecrosis of the knee. Level of evidence: observational study, level I

Use of depot medroxyprogesterone acetate and fracture risk

Depot medroxyprogesterone acetate (DMPA), which has a high rate of use among teenagers in Europe and the United States, has been associated with impaired bone mineral acquisition during adolescence and accelerated bone loss in later life. Studies on the association between DMPA use and fracture risk are limited.; We aimed at evaluating the relationship between use of hormonal contraceptives, specifically DMPA, and fracture risk.; We conducted a case-control analysis using the United Kingdom-based General Practice Research Database.; Participants were females aged 20-44 yr with an incident fracture diagnosis between 1995 and 2008.; Odds ratios (OR) with 95% confidence intervals (CI) of incident fracture in relation to exposure to DMPA or combined oral contraceptives were assessed. Adjustments were made for smoking, body mass index, and additional potential confounders.; We identified 17,527 incident fracture cases and 70,130 control patients (DMPA exposure: 11 and 8%, respectively). Compared with nonuse, current use of one to two, three to nine, or 10 or more DMPA prescriptions yielded adjusted OR for fractures of 1.18 (95% CI = 0.93-1.49), 1.36 (95% CI = 1.15-1.60), and 1.54 (95% CI = 1.33-1.78), respectively. Fracture risk was highest after longer treatment duration (<2-3 yr), and there was no difference in patients below and above the age of 30 yr. For users of combined estrogen-containing oral contraceptives, the OR were around 1.; This population-based study suggests that use of DMPA is associated with a slightly increased risk of fractures

Relation between homocysteine and biochemical bone turnover markers and bone mineral density in peri- and post-menopausal women

Background: Recently, increased plasma homocysteine (Hcy) has been suggested as an independent risk factor for osteoporotic fractures. Therefore, it is tempting to speculate that Hcy adversely affects bone metabolism. This study aimed to analyze the relation between Hcy and biochemical markers of bone metabolism and bone mineral density (BMD). Materials and methods: We investigated 143 peri- and post-menopausal women [median age (25th-75th percentile), 67 (57-75) years]. All subjects underwent a detailed medical examination, measurement of bone mineral density at lumbar spine (BMD-LS) and total hip (BMD-HIP), and fasting venous blood and urine sampling. Osteocalcin (OC), serum calcium (Ca), urinary desoxypyridinoline cross-links (DPD), osteoprotegerin (OPG) and soluble receptor activator of NF-κB ligand (sRANKL) were studied. Results: According to BMD subjects were classified as normal (n=24), osteopenic (n=51) or osteoporotic (n=68). Median Hcy did not differ between normal, osteopenic and osteoporotic subjects (p=0.647). Partial correlation analysis, controlling for the major confounders, age, creatinine, menopause and previous fractures, revealed significant correlations between Hcy and DPD (r=0.193, p=0.022), as well as between Hcy and Ca (r=0.170, p=0.045). After adjustment for the same confounders, subsequent regression analysis confirmed significant associations of Hcy with DPD and Ca. No significant relations could be observed between Hcy and BMD-LS, BMD-HIP, OC, OPG or sRANKL. Conclusion: Our results demonstrate weak, but significant, relations between Hcy and markers of organic and inorganic bone resorption, suggesting a mechanistic role of Hcy in bone metabolism. The relation between Hcy and bone resorption was not dependent on OPG or sRANK

Effect of ibandronate on spontaneous osteonecrosis of the knee: a randomized, double-blind, placebo-controlled trial

Summary: Based on this double-blind, placebo-controlled study, ibandronate has no beneficial effect on clinical and radiological outcome in patients with spontaneous osteonecrosis of the knee over and above anti-inflammatory medication. Introduction: Observational studies suggest beneficial effects of bisphosphonates in spontaneous osteonecrosis (ON) of the knee. We investigated whether ibandronate would improve clinical and radiological outcome in newly diagnosed ON. Methods: In this randomized, double-blind, placebo-controlled trial, 30 patients (mean age, 57.3 ± 10.7years) with ON of the knee were assigned to receive either ibandronate (cumulative dose, 13.5mg) or placebo intravenously (divided into five doses 12weeks). All subjects received additional treatment with oral diclofenac (70mg) and supplementation with calcium carbonate (500mg) and vitamin D (400IU) to be taken daily for 12weeks. Patients were followed for 48weeks. The primary outcome was the change in pain score after 12weeks. Secondary endpoints included changes in pain score, mobility, and radiological outcome (MRI) after 48weeks. Results: At baseline, both treatment groups (IBN, n = 14; placebo, n = 16) were comparable in relation to pain score and radiological grading (bone marrow edema, ON). After 12weeks, mean pain score was reduced in both ibandronate- (mean change, −2.98; 95% CI, −4.34 to −1.62) and placebo- (−3.59; 95% CI, −5.07 to −2.12) treated subjects (between-group comparison adjusted for age, sex, and osteonecrosis type, p = ns). Except for significant decrease in bone resorption marker (CTX) in ibandronate-treated subjects (p < 0.01), adjusted mean changes in all functional and radiological outcome measures were comparable between treatment groups after 24 and 48weeks. Conclusions: In patients with spontaneous osteonecrosis of the knee, bisphosphonate treatment (i.e., IV ibandronate) has no beneficial effect over and above anti-inflammatory medication