Commission for state liquidity protection of large banks
Published: Friday, Nov 10th 2023, 12:20
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The Economic Affairs Committee of the Council of States continues to support state liquidity protection for systemically important banks. However, it would like to discuss this safety net in connection with the further development of the too-big-to-fail measures.
The Economic Affairs and Taxation Committee of the Council of States (WAK-S) therefore suspended its deliberations and is awaiting an analysis report from the Federal Council, as announced by the Parliamentary Services on Friday. The WAK-S was therefore unable to conclusively clarify fundamental questions regarding the transfer of the so-called Public Liquidity Backstop (PLB) into ordinary law.
The conditions under which a bank is systemically relevant, the extent to which the public liquidity guarantee influences the competitive situation, whether the aid is intended to act as a restructuring or liquidity instrument and at what point in time the banks have to pay for it all need to be clarified.
According to the WAK-S, these issues also interface with the planned revision of the too-big-to-fail legislation. It makes sense to wait for the analysis report announced for spring 2024 for an assessment in the overall context. The PLB was used in the rescue and takeover of the major bank CS by UBS, but only via emergency law.
A narrow majority of the Commission also wants to bring forward and introduce as quickly as possible three internationally widespread supervisory and sanctioning instruments instead of evaluating them.
This concerns the so-called senior manager regime, which allows the allocation of responsibilities, the authority to impose fines on the Financial Market Authority (FINMA) and the publication of stress tests for systemically important banks. To this end, the WAK-S submitted a committee motion with a casting vote by its Chairman Alex Kuprecht (SVP/SZ).
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