The government has welcomed proposals presented by a commission of experts at the end of September on the issue of Swiss banks that are considered “too big to fail”.
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It announced on Wednesday that it was now instructing the finance ministry to prepare a draft consultation paper by the beginning of next year, adding that the commission’s final report was a “good basis for drafting a bill”.
The commission was set up after the government had to bail out UBS in October 2008 because of economic risks, in particular brought about by the subprime mortgage crisis in the United States.
The experts said Swiss banks UBS and Credit Suisse must hold almost twice as much capital as set out in the new international Basel III standards.
The commission proposed additional regulations on organisation, risk diversification and liquidity for big banks.
The finance ministry has until the end of the year to examine how the tax framework for the Swiss bond market can be improved.
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Swiss banks get stricter rules than Basel III
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The government’s “too big to fail” commission said on Monday that the move would limit the risk that a bank failure would drag down the economy. The commission was set up in the wake of the financial crisis and the government bail-out of the troubled bank UBS in 2008. Made up of top regulators, bank…
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UBS and Credit Suisse must still wait for the results of a Swiss report into the “too-big-to-fail” issue later this month before they can assess the implications for their business. The Basel III reforms, hammered out on Sunday but yet to be rubber stamped later this year, lay down measures designed to help prevent another…
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But regulating such large and complex institutions runs the risk of the rules themselves creating instability. Two national taskforces are currently weighing up how to solve the conundrum. The catastrophic effects on the Swiss economy of UBS or Credit Suisse going bankrupt are obvious. The two largest banks inject a large share of the 15…
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