© Reuters. FILE PHOTO: FILE PHOTO: A Swiss flag is imagined above a logodesign of Swiss bank Credit Suisse in Bern, Switzerland, November 15,2023 REUTERS/Denis Balibouse/File Photo
By Stefania Spezzati and Oliver Hirt
LONDON/ZURICH (Reuters) -A year after the banking crisis that dropped Credit Suisse, authorities are still thinkingabout how to repair lendinginstitutions’ vulnerabilities – consistingof in Switzerland, where the bank’s takeover by competitor UBS developed a leviathan.
The Swiss government-sponsored rescue of Credit Suisse and U.S. bank restores in March 2023 splashed the instant fires kindled by a run at obscure U.S. local loanprovider Silicon Valley Bank.
But regulators and legislators are just beginning to address how banks could muchbetter endure deposit runs, and whether they requirement mucheasier gainaccessto to emergencysituation money.
A top worldwide monetary guarddog justrecently alerted Switzerland should reinforce its banking controls, highlighting the danger that a failure of UBS – now one of the world’s mostsignificant banks – would posture to the monetary system.
“The banking system is no muchsafer,” stated Anat Admati, teacher at the Stanford Graduate School of Business and co-author of the book “The Bankers’ New Clothes: What’s incorrect with banking and what to do about it.”
“Global banks can cause a lot of damage,” she included.
Rules presented after the 2008 monetary crisis did little to avoid last year’s crash, as customers pulled money from banks at extraordinary speed.
One of the secret weakpoints that emerged last year was that banks’ liquidity requirements showed inadequate. Credit Suisse saw billions of deposits leaving in a matter of days, burning through what had appeared to be comfy buffers of money.
Introduced after the 2008 monetary crisis, the so-called liquidity protection ratio (LCR) hasactually endedupbeing a secret sign of banks’ capability to satisfy money needs.
LCRs need banks to hold enough properties that can be exchanged for money to endure substantial liquidity tension over 30 days.
European regulators are disputing whether to reduce the duration of severe tension to procedure buffers banks requirement over muchshorter timeframes, of state one or 2 weeks, according to one individual with k