Switzerland: Financial Sector Stability Assessment; imf country Report 14/143; April 16, 2014

71. The SNB and FINMA should upgrade their cooperation arrangements to handle 
crisis events effectively and promptly. The domestic cooperation arrangements work relatively 
well in normal circumstances, but the absence of a lead supervisor or overseer may prove 
problematic during crisis. The Swiss authorities should develop a dedicated crisis management 
framework, for instance under the umbrella of the FDF-FINMA-SNB MOU, indicating the roles, 
responsibilities, and potential tools to manage crisis events affecting the FMIs. The crisis 
management framework should be regularly tested and updated. Crisis arrangements should 
also be part of the MOUs with foreign authorities.
72.  Although the FMIs’ risk management frameworks are well developed, they have 
gaps. The following improvements are in particular recommended: (i) a realignment of risk 
management reporting lines to ensure the independence of the risk management functions of 
the CCP and CSD; (ii) the risk management framework should explicitly address 
interdependencies, such as risks that the group bears from participants active in more than one 
FMI or business area of the group; (iii) the establishment of a comprehensive liquidity risk 
management framework for the CCP and the CSD; (iv) the full contractual and operational 
implementation of segregation and portability arrangements for a participant’s positions and 
collateral, and for policies regarding segregation and portability for a participant’s client’s 
positions and collateral at the CCP; and (v) development of a recovery plan for every FMI in line 
with ongoing international guidance ensuring continuation of critical operations in extreme 
circumstances. 
E. Financial Safety Nets, Crisis Management, and Resolution Framework 
Bank intervention and resolution framework 
73. FINMA enjoys a broad range of early intervention and resolution powers. Clear 
criteria allow for the timely exercise of resolution powers, and the powers could successfully 
preserve systemic business functions. The resolution regime broadly aligns with international 
best practice but some enhancements are merited. A key weakness is the requirement to secure 
approval from a majority of a bank’s creditors before resolving banks not previously designated 
as SIFIs. Such banks could however prove systemic under stressed circumstances, and having to 
consult creditors before acting could significantly worsen the risks. 

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SWITZERLAND
36 
INTERNATIONAL MONETARY FUND
The following reforms are recommended: 
 
Adopt the full range of resolution powers, without requiring creditor approval, for all banks.
10
 
Introduce explicit statutory powers to override shareholders’ rights in order to effect a 
merger or acquisition and to write down debt.
11
 
Enhance bridge bank powers.
12
 
Issue guidance for resolution and recovery planning for banks not designated as SIFIs.