Attempting to boost liquidity to shield the nation’s economy from the pandemic in the future, the Swiss government launched new rules. The new rules are for the nation’s five major banks. The banks should at least boost their liquidity to prevent Covid from getting worse in the future. The Swiss Federal Council announced a statement for the adoption of the ordinance.
In the statement, the Swiss Federal Council said that the major purpose for the revision is to ensure important banks (SIBs) to own sufficient liquidity. This way, the bank could absorb liquidity shocks. Thus, they could cover their needs in the restructuring or liquidation. The five major banks are playing significant roles now. They should at least hold enough liquidity.
They should hold the shock, learning from the past 90-day liquidity crisis. The five major banks following the requirements are UBS, Credit Suisse, Raiffeisen, PostFinance, and Zuercher Kantonalbank. Based on the statement, moreover these five banks should strategize their liquidity performance by the first June of this year.
The new rules cover the Swiss Financial Market Supervisory Authority (FINMA) to impose institution-specific surcharges. The epitome of the new rules allow banks to generate liquidity during crises using the sale of marketable securities. Furthermore, this new requirement could help the bank measure the count towards the upper liquidity limit.
In addition, during the making of the new rules, the government has included the criticisms and feedback from the bank. This allows the better performance of the new rules. Credit Suisse said that the firm would adopt the liquidity ordinance. The rest of the lenders need at least 18 months to comply with the liquidity requirements.
