SNB banker supports leverage "safety valve"

The vice-chairman of Switzerland's central bank has said he supports limiting how much debt banks can take on, calling it a "safety valve".

This content was published on December 16, 2008

In a speech at the London School of Economics on Monday evening, Philipp Hildebrand of the Swiss National Bank (SNB) said that stricter leverage ratios should be in place for the country's financial institutions.

Leverage ratio refers to the amount of money a bank borrows to supplement existing invested funds. Leverage increases returns on positive investments but amplifies losses.

Switzerland has introduced a leverage ratio limit on UBS and Credit Suisse, the country's two largest banks.

Hildebrand said that while higher leverage ratios alone would not have prevented the financial crisis, they could have mitigated it.

"Looking at risk-based capital measures, the two large Swiss banks were among the best-capitalised large international banks in the world," he said.

"Looking at simple leverage, however, these institutions were among the worst-capitalised banks."

In compliance with the JTI standards

In compliance with the JTI standards

More: SWI certified by the Journalism Trust Initiative

You can find an overview of ongoing debates with our journalists here. Please join us!

If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at

Change your password

Do you really want to delete your profile?

Your subscription could not be saved. Please try again.
Almost finished... We need to confirm your email address. To complete the subscription process, please click the link in the email we just sent you.

Discover our weekly must-reads for free!

Sign up to get our top stories straight into your mailbox.

The SBC Privacy Policy provides additional information on how your data is processed.