The Swiss Financial Market Supervisory Authority FINMA supports the consultation drafts presented by the Federal Council for the implementation, within the Banking Act and the Liquidity Ordinance, of the measures set out in the Federal Council’s “too big to fail” report and the PInC report on the CS crisis. These are key to strengthening banking stability and the reputation of the Swiss financial centre. To achieve the best possible results, FINMA recommends that the measures proposed be implemented as a comprehensive package. In particular, it advocates for the strengthening of instruments with a preventive effect.
In its consultation drafts published today, the Federal Council sets out the measures it intends to take to strengthen the “too big to fail” (TBTF) framework in Switzerland.
FINMA welcomes the consultation drafts and the proposed introduction of several preventive and disciplinary instruments. The consultation drafts are clearly designed with proportionality in mind while at the same time setting the right incentives for all supervised institutions. They will make a decisive contribution to reducing the likelihood of crises and resolution cases arising in the Swiss banking sector.
FINMA decided at the beginning of 2022 to seek new statutory powers and raised this need for action in the inter-agency dialogue. For three years, it has also been publicly advocating for the strengthening of its statutory instruments, as set out and recommended in both the Federal Council’s TBTF report and the Parliamentary Investigation Committee (PInC) report. FINMA welcomes the fact that the drafts expand the supervisory tools where this is necessary to ensure the most effective fulfilment of its statutory mandate.
The proposed measures are key to proactively strengthening the resilience of banks and thus the stability of the financial system. They include, for example, the power to communicate more actively with the public about concluded enforcement proceedings, the introduction of an accountability regime, the imposition of proportionate corrective measures in the event of imminent breaches of financial market law, the authority to impose fines, and additional resolution options in the event of a crisis.
FINMA also supports the proposed changes in the area of liquidity, such as the LOLR preparatory requirements. These measures are intended to make it easier for larger banks to access liquidity support in times of stress.
FINMA supports the amendments to legislation and ordinances proposed by the Federal Council to strengthen banking stability. It is important that the measures now being proposed are implemented as a comprehensive package in order to achieve the greatest possible impact and thereby significantly strengthen the resilience of the Swiss financial centre.
