Swiss National Bank Calls for Stronger Financial Regulations Post Credit Suisse Collapse

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Switzerland’s financial regulations need strengthening after UBS’s takeover of Credit Suisse, according to the Swiss National Bank (SNB). The SNB emphasized the need for tougher capital and liquidity requirements to prevent future financial instability.

Credit Suisse’s collapse last year, followed by its state-engineered merger with UBS, highlighted significant weaknesses in the regulatory framework. The SNB’s annual financial stability report supported the Federal Council’s proposals for stricter capital and liquidity regulations, early intervention, and improved recovery and resolution planning.

The SNB particularly advocated for enhancements in three key areas of capital regulation: improving the stability contribution of Additional Tier 1 instruments, strengthening the calculation of Common Equity Tier 1 capital, and reinforcing the capital regime for parent banks. Additionally, the SNB suggested reviewing the liquidity coverage ratio to better handle rapid outflows, as seen during the Credit Suisse crisis. The SNB also noted that systemically important banks must now comply with new liquidity requirements, addressing some but not all identified weaknesses.


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