Switzerland: Financial Sector Assessment Program-Technical Note on Financial Safety Net and Crisis Management Arrangements

International Monetary Fund

No 2025/297, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note examines the Swiss financial safety net and crisis management framework, including bank resolution mechanisms. The focus is on the authorities’ capacity to address failing and potentially failing banks swiftly and effectively, as well as their preparedness for financial distress. The assessment draws on an analysis of existing legislation, policies, responses to a pre-mission questionnaire, and discussions with authorities and the private sector. An evaluation of Switzerland's financial stability framework against key international standards, including those from the Financial Stability Board and International Association of Deposit Insurers, reveals critical gaps requiring immediate action. Imperatives include substantially increasing the scope of resolution planning and resolvability assessments, and further enhancing resolution tools. A major impediment to effective crisis management is the severely understaffed recovery and resolution unit within the Swiss Financial Market Supervisory Authority. Furthermore, the financial safety net lacks credibility due to a noncompliant Deposit Insurance Scheme and the absence of a dedicated resolution fund to cover capital needs not met by bail-in. Adopting a Public Liquidity Backstop is critical to reinforcing the overall safety net and ensuring the credibility of both Emergency Liquidity Assistance and the resolution frameworks, reducing reliance on direct government support during crises.

Keywords: IMF staff; credit Suisse; infrastructure ordinance; staff team; liquidity support; Financial sector stability; Lender of last resort; Crisis management; Collateral; Global (search for similar items in EconPapers)
Pages: 53
Date: 2025-11-13
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