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According to economics professor Aymo Brunetti (60), Credit Suisse’s (CS) concept of “too big to fail” needs no adjustments. Currently, the conditions for this are not met at all.
“What is being done now is a liquidity boost provided by the National Bank for a systemically important, solvency bank for such crises,” the economics professor said in an interview with Tammedia newspapers published Friday. The “too big to fail” rules would only come into play if CS had too little equity, which is not currently the case. In other words, there is no question of the bank being bailed out by the state.
The situation cannot be compared to the 2008 financial crisis.
On Wednesday evening, the financial market supervisory agency Finma and the Swiss National Bank (SNB) announced that they will provide liquidity to Credit Suisse if needed. Just a few hours later he announced his need for CS. It borrows up to CHF 50 billion from the SNB to provide liquidity. According to Brunetti, the SNB has thus fulfilled its mandate to ensure financial stability.
The action taken by the SNB is not a sign of a financial crisis like it was in the period when UBS needed to be rescued. “As of today, this cannot be compared to the great financial crisis of 2008,” Brunetti said. (SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
