FINMA has played an active role in discussions with international bodies on the recovery and resolution of global systemically important financial institutions and exerted a material influence in their outcome. An effective, credible and internationally recognised strategy is the only way to prevent individual parts of companies from being protected or "ring-fenced" at the national level as a preventive measure. Ring-fencing should be avoided wherever possible because it can result in the collapse of the institution concerned. If the supervisory authority in the country in which an internationally active group of banks or institutions is domiciled (its home regulator) does not take responsibility for the entire group, the surviva,l or at least the orderly resolution of its foreign units, is not guaranteed.
Early amendments to Swiss supervisory law
Switzerland began revising its supervisory law as early as 2008, anticipating the proposals put forward by the Financial Stability Board (FSB
) and passed by the G-20
for global systemically important financial institutions in 2011 by revising the Banking Act (BA
), Banking Ordinance (BO
) and Capital Adequacy Ordinance (CAO
) and establishing a completely new FINMA Banking Insolvency Ordinance (BIO-FINMA
Basis for recovery and resolution planning
The legislation mentioned above also provides a legal basis for institution-specific recovery and resolution planning (RRP), thus anchoring the FSB proposals in Swiss law. A special feature for Switzerland is that the RRP must include an emergency plan to ensure that a systemically important bank (SIB) can maintain at all times and without interruption functions that are essential to the Swiss economy and cannot be replaced at short notice.