Swiss National Bank (SNB) President Thomas Jordan, speaking at a conference in Bern, called for banks to maintain substantial collateral to cover potential emergency liquidity scenarios. The move comes in the aftermath of Credit Suisse (SIX:CSGN)'s client withdrawal that led to the bank's takeover by UBS Group AG (SIX:UBSG).
Jordan's remarks on Wednesday indicate an effort to prevent similar incidents, suggesting that in cases where collateral is insufficient, a state-backed liquidity backstop could be implemented. This measure was initially used during the banking crisis as a crisis management tool and is now set to be permanently established through upcoming legislation in Switzerland.
In addition to these safeguards, Jordan also proposed an update to bank-liquidity regulations. These changes aim to reflect larger and quicker deposit outflows at banks, as evidenced by the recent situation at Credit Suisse.
The takeover of Credit Suisse by UBS Group AG was government-mediated, sparking discussions among Swiss and global regulators about future-proofing the financial system. The dialogue has been centered around creating robust mechanisms to prevent similar situations from happening in the future.
On the topic of monetary policy, Jordan indicated that SNB expects inflation to briefly surpass 2% due to widespread rent increases. However, he anticipates that inflation will fall below this level in the medium term. His comments underscore the central bank's commitment to maintaining price stability amidst ongoing shifts in the banking sector.
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