Swiss Government Details Measures to Avert Banking Crises

Switzerland's Federal Council is rolling out a new set of regulatory measures designed to bolster the stability of its banking sector and prevent future crises. The proposals specifically target financial institutions considered 'too big to fail,' aiming to enhance accountability and risk management.

Key among the proposed changes are mechanisms to hold senior bank executives responsible for their actions. This includes imposing a formal duty of diligence and introducing penalties such as fines and the clawback of bonuses. The aim is to disincentivize excessive risk-taking and ensure that leadership is directly accountable for the financial health of their institutions.

The Federal Council is also expanding the regulatory toolkit available to FINMA, Switzerland's financial market supervisory authority. This move is intended to give regulators more power to oversee and intervene in the operations of large banks, thereby strengthening the overall supervisory framework.

These proposed modifications to the Banking Act and the ordinance on liquidity are now open for public consultation. The initiative comes as parliamentary debate on strengthening UBS's capital requirements is set to begin, signaling a proactive approach by the Swiss government to address systemic risks in its crucial financial industry.