Funding of compulsory stocks

Loans for compulsory stocks

The federal government facilitates the financing of compulsory stockpiling by granting companies guarantees on bank loans, known as loans for compulsory stocks, to finance stockpiling. The commercial banks are willing to use a compounded SARON (Swiss Average Rate Overnight) as the interest rate for these loans due to the federal guarantee. If SARON interest rates are negative, an interest rate of 0% is applied. In addition, the federal government grants additional tax write-offs on compulsory stocks.

Guarantee funds

The economic sectors subject to compulsory stockpiling can set up guarantee funds to cover storage costs and hedge against price risks. These funds are managed by privately run compulsory stock organisations in the respective sectors. They primarily pursue economic objectives.

The guarantee funds meet the costs incurred by companies required to hold compulsory stocks, such as capital costs, warehouse rent, insurance, transport, administration and goods handling. To cushion price risks, the guarantee fund issues loans to the compulsory stockholders; these must be repaid when the compulsory stocks are liquidated. The capital in the guarantee funds belongs to the compulsory stock organisations and not to the individual members or the federal government.

The companies holding compulsory stocks transfer their costs to the sales price, so the costs are ultimately borne by the end-consumer.