SNB Chairman warns against hasty regulation

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SNB boss Thomas Jordan assumes that after CS’ takeover, the new Superbank UBS will take on its new role with a high sense of responsibility. Meanwhile, according to the text of his speech at the SNB plenary on Friday, he said that healthy competition in the banking sector is also in the SNB’s “primary interest”.

For monetary policy to spread throughout the economy, bank deposits and loan rates need to respond “quickly and appropriately” to changes in key interest rates, according to the SNB Chairman. “The more pronounced the competition between banks, the more likely they are to do it,” Jordan says.

Another banking place

However, with the takeover of CS by UBS, the structure of the banking sector has fundamentally changed. It is therefore important that Swiss households and companies can continue to enjoy a wide range of banking services at market-friendly prices. “This requires competition and diversity.”

He is optimistic that domestic and foreign banks will adjust their product ranges accordingly. The head of the SNB also expects the new UBS to “responsibly fulfill its mandate to provide banking services to Swiss households and the economy”.

no fast motion

At the same time, Jordan warned not to rush to regulate banks. This should be reviewed against the background of recent events. “A comprehensive analysis is required.”

The head of the SNB is clear that banks will have to have “enough” assets in the future. And they should be able to pledge or transfer it at any time without restriction and thus deliver it as collateral in their existing liquidity facilities. “In this way, we will be able to provide the necessary liquidity even in extreme situations without the need for extraordinary situations.”

Credit Suisse’s collapse could have been fatal

However, Jordan once again emphasized to SNB shareholders that there is no alternative to saving CS. “If Credit Suisse collapsed, many Swiss households and SMEs would no longer have access to their deposits.” In addition, especially SMEs no longer have a credit limit at the bank. “The economic damage would be enormous.” Also, according to the head of the SNB, the collapse of the big bank could trigger a shock wave in the global financial system.

In his speech, the SNB Chairman also talked about the recent rate hikes. “We needed to understand that not only raw materials were affected by price increases, but also a growing number of other goods and services.” In such cases, monetary policy should intervene decisively. In this context, he reminded the statement made in March, “We will tighten the monetary policy further if necessary.”

Source :Blick