The Swiss parliament on Thursday launched talks on a planned public liquidity backstop (PLB) for systemically important banks (SIBs), shortening the industry engagement period to 21 June 2023. Said Due to the urgency of the matter, we have decided to close this issue more quickly.
Council Introduced PLB for the first time It was established in March last year as part of a plan to enhance the liquidity of domestic SIBs during the resolution or liquidation process. At the time, the Swiss government had ordered the Federal Ministry of Finance to prepare a consultation draft by mid-2023.
According to Swiss banking law, SIBs such as Credit Suisse, UBS and Raiffeisen perform important functions such as domestic deposit, lending and payment transactions. A backstop is provided as a third level of government-backed liquidity when these types of banks are in trouble and unable to meet their financial obligations after exhausting their liquid assets. A public liquidity backstop will be available if the second round of emergency liquidity provided by the Swiss Central Bank proves insufficient.
The parliamentary decision comes after recent troubles with Swiss financial giant Credit Suisse. At the height of the recent U.S. banking crisis, the shares of the already troubled giant bank fell to an all-time low. To prevent a banking crisis, Switzerland’s top financial authority issued an emergency liquidity relief of CHF 109 billion to Credit Suisse and brokered a swift takeover of the lender by rival UBS.
of statement The Swiss government has used emergency legislation during this period to introduce a framework of public liquidity backstops in an effort to “prevent the disorderly bankruptcy of Credit Suisse,” a report released Thursday said. It pointed out. These provisions are now being added to the draft amendments to the Banking Law of countries aiming to introduce PLBs.
“To avoid the deadline, the Bundestag must submit a draft to parliament within six months to convert it into ordinary law,” the council added.
“This draft not only establishes the framework of the PLB instruments introduced by the Federal Council through legislation in March 2023, but also other measures introduced at that time aimed at supporting the acquisition of Credit Suisse by UBS. The aim is to translate it into law,” the executive branch further explained.
Switzerland began enforcing rules on the SIB in 2012, calling for higher capital and liquidity requirements to mitigate the impact of a major bank failure on the Swiss economy. Regulations have tightened over the years. However, the government is currently considering introducing PLB.
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The Swiss parliament on Thursday launched talks on a planned public liquidity backstop (PLB) for systemically important banks (SIBs), shortening the industry engagement period to 21 June 2023. Said Due to the urgency of the matter, we have decided to close this issue more quickly.
Council Introduced PLB for the first time It was established in March last year as part of a plan to enhance the liquidity of domestic SIBs during the resolution or liquidation process. At the time, the Swiss government had ordered the Federal Ministry of Finance to prepare a consultation draft by mid-2023.
According to Swiss banking law, SIBs such as Credit Suisse, UBS and Raiffeisen perform important functions such as domestic deposit, lending and payment transactions. A backstop is provided as a third level of government-backed liquidity when these types of banks are in trouble and unable to meet their financial obligations after exhausting their liquid assets. A public liquidity backstop will be available if the second round of emergency liquidity provided by the Swiss Central Bank proves insufficient.
The parliamentary decision comes after recent troubles with Swiss financial giant Credit Suisse. At the height of the recent U.S. banking crisis, the stock price of the already troubled giant bank fell to an all-time low. To prevent a banking crisis, Switzerland’s top financial authority issued an emergency liquidity relief of CHF 109 billion to Credit Suisse and brokered a swift takeover of the lender by rival UBS.
of statement The Swiss government has used emergency legislation during this period to introduce a framework of public liquidity backstops in an effort to “prevent the disorderly bankruptcy of Credit Suisse,” a report released Thursday said. It pointed out. These provisions are now being added to draft amendments to the banking laws of countries aiming to introduce PLBs.
“To avoid the deadline, the Bundestag must submit a draft to parliament within six months to convert it into ordinary law,” the council added.
“This draft not only establishes the framework of the PLB instruments introduced by the Federal Council through legislation in March 2023, but also other measures introduced at that time aimed at supporting the acquisition of Credit Suisse by UBS. The aim is to translate it into law,” the executive branch further explained.
Switzerland began enforcing rules on the SIB in 2012, calling for higher capital and liquidity requirements to mitigate the impact of a major bank failure on the Swiss economy. Regulations have tightened over the years. However, the government is currently considering introducing PLB.
Gate.io in Hong Kong. CFI’s new office. Read today’s news nugget.
