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General Information

Money-Market Transactions

Here you will find a brief description of the most common products that protect against interest rate risks.

Dual Currency Deposit (DCD)

Objective

Short-term investment earning more interest than a conventional time deposit.

Brief Description

Structured time deposit at a fixed interest rate for a specified term from one week to one year. On opening, an exchange rate against a reference currency is specified.
On maturity, the currency for the repayment of capital and interest depends on whether the exchange rate is above or below the agreed exercise price. Example CHF investment: If the exchange rate is above the strike price at maturity, then the capital and interest will be repaid in the investment currency. If it is lower, the capital and net interest are converted into the reference currency on the basis of the exercise price and are repaid in that foreign currency. A higher interest rate is possible on this time deposit because the client bears a foreign-exchange risk.

Dual currency deposits are possible starting from an amount of USD 70,000 (or the equivalent in another currency), and they are subject to withholding tax. This form of investment is advisable only if there is no problem should the foreign currency be used for the payment at maturity. However, the DCD is also suitable for investing foreign currencies. In this case, if the exchange rate is above the agreed exercise price at maturity, the repayment is made in Swiss francs; otherwise, it is made in the investment currency.

Profit Potential

Higher interest than on conventional investments.

Risk

Exchange rate risk, credit risk (credit rating of bank)

Similar Product

FINER (same mechanism, but in connection with a fiduciary investment)

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