Switzerland: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis and Stress Testing

International Monetary Fund

No 2025/311, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical note presents the findings and recommendations of the systemic risk analysis conducted for the Swiss financial system as part of the Switzerland 2025 financial sector assessment program. The analysis intends to help identify the sources of vulnerabilities and systemic risk facing the Swiss financial sector, to inform policy advice and strengthen the resilience of the system to absorb external adverse shocks and to detect and counter endogenously building vulnerabilities of the financial system. The analysis involves various stress test exercises to assess the resilience of the financial system. A holistic vulnerability analysis combines all findings from current conditions and all forward-looking model-based analyses. The stress tests placed emphasis on structural models, given Switzerland’s specific historical macro-financial dynamics. The pension fund sector appears robust, but some uncertainties remain due to data limitations. Despite a difficult market environment and increasing life expectancy, pensions funds have fared well over the last years. Pension fund bankruptcies are rare and have mostly involved small institutions. As a result, gross insolvency payments by the guarantee fund, which have to be financed by the pension sector as a whole, have been low and stable.

Keywords: solvency stress test; solvency risk; banking system profitability; coverage ratio; financial system structure; Stress testing; Solvency; Pensions; Insurance; Pension spending; Global (search for similar items in EconPapers)
Pages: 122
Date: 2025-11-24
New Economics Papers: this item is included in nep-fdg and nep-inv
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