Cabinet moves ahead with “too big to fail”

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”.

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.