Switzerland: Financial System Stability Assessment

June 26, 2019

Preview Citation

Format: Chicago

Switzerland: Financial System Stability Assessment, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Summary

Swiss financial institutions are well capitalized and could withstand the severe shocks under the adverse stress test scenarios, but macrofinancial vulnerabilities are deepening. Important reforms have been made since the 2014 FSAP, but several critical recommendations and emerging challenges have yet to be fully addressed. Capital buffers have increased across all categories of banks, and while the two global systemically important banks have downsized and deleveraged significantly since the global financial crisis, since 2013 they have been growing again. Macroprudential measures have not been taken since 2014 and is constrained by having only one mandated tool and a self-regulation agreement with banks. The financial supervisor (FINMA) has developed into a trusted supervisor, but as a small entity, it relies heavily on external auditors to conduct on-site supervision; the associated conflict of interest and supervisory objectivity risks need to be carefully managed. The combination of an ex-post funding mechanism, a low cap on banks’ contributions, and a private deposit insurance agency run by active bankers, weakens the crisis management arrangements.

Subject: Bank resolution framework, Banking, Commercial banks, Financial crises, Financial institutions, Financial sector policy and analysis, Insurance companies, Mortgages, Stress testing

Keywords: Bank resolution framework, Banking sector, Cantonal bank, Commercial banks, CR, Financial system, Global, Insurance companies, Interest rate, Investment funds, ISCR, Market share, Mortgages, Resolution regime, Return on equity, Risk profile, Staffing resource, Stress testing

Publication Details

Pages:

60
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/183
Stock No:

1CHEEA2019003
ISBN:

9781498321662
ISSN:

1934-7685

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