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

FINMA cannot carry out critical enhancement plans without augmentation of resources. 
FINMA observes a self-imposed headcount ceiling, following substantial personnel increases in 
recent years. The headcount ceiling is unhelpful. As noted above, there are weaknesses in 
supervision, and supervision of mid-sized banks is significantly less intensive than that of the large 
banks. To counter this issue in particular will require augmentation of resources. FINMA could also 
enhance the breadth of its resources, including, perhaps, increasing the exchange of staff with 
supervisory agencies abroad or pre-entry training. 
Switzerland, like much of Europe, remains heavily reliant on the banking sector. Capital 
markets are relatively less developed. The Swiss authorities may wish to review the extent to which 
taxes, for instance on bond issuance, deter capital market development and enhance consumer 
protection in securities markets so as to give confidence as to the soundness of the markets. 
Further enhancement of FINMA’s agenda for improving supervision of securities markets would 
also be helpful.

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SWITZERLAND
INTERNATIONAL MONETARY FUND
9 
Table 1. Switzerland: Key Recommendations
 
Recommendation Timing 
Impose a leverage ratio on the banks that is tougher than international minima. 
Short term 
Remain alert to the build-up of risks in domestic real estate and mortgage markets. Fully enforce 
self-regulation, and consider further raising the CCB and introducing additional tools (e.g., debt-to-
income (DTI) and loan-to-value (LTV) limits). 
Short term 
Reach agreement with partner supervisors as to the resolution of the country’s G-SIFIs.
Medium term 
Make available the full range of best practice resolution powers to handle any bank deemed 
systemic at the time.
Medium term 
Overhaul the deposit insurance scheme: make its provisions more transparent; reform its 
governance; and build up dedicated ex ante funding with a back-up line of support. Make deposit 
insurance funds available to finance resolution measures on a least-cost basis. 
Short term 
Monitor closely the condition of the life insurance firms in advance of the prospective elimination 
of the palliative measures protecting the companies from the effects of low interest rates, and 
enhance public understanding of the SST. 
Medium term 
Issue guidance on the cantonal banks’ governance, based on their best practice, including reducing 
political interconnectedness. Issue guidance on guarantees for cantonal banks, to enhance 
transparency and create a level playing field both across the cantonal banks and with the rest of 
the banking sector. 
Short term 
Ensure that the likely consolidation among the private banks in response to U.S. tax pressures 
proceeds smoothly. 
Short term 
Issue guidance to auditors to ensure consistency of supervision, and undertake more “deep dives” 
into particular areas of concern. Increase the intensity of onsite supervision, including of middle-
sized and smaller banks. 
Short term 
Increase FINMA’s resources so it can carry out its agenda for supervisory enhancement. The 
resource pool for highly qualified staff could be expanded.
Short to 
Medium term 
Prioritize regulatory reform of securities markets, to bring arrangements up to international 
standards. Enhance focus on conduct of business supervision of banks and securities dealers. 
Medium term 
Pursue legislation to improve policyholder protection, enhance brokers’ supervision, and increase 
the level of public disclosure. 
Medium term 
Bring FMIs into compliance with new international principles and establish crisis management 
arrangements between the authorities of FMIs. 
Short term 
Establish transparency in the financial sector as a core element of the Swiss “brand,” in particular 
through heightening banks’ disclosure requirements, including as regards capital weighting and 
providing data for adequate risk analysis. 
Short term 

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SWITZERLAND