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

76. The scheme is complex and aspects should be strengthened. The system-wide cap of 
Sw F 6 billion could create the impression that at times of stress some insured deposits would 
not be reimbursed.
15
Other features of the scheme, which may reduce the risk and cost to the 
members, are complex and difficult for depositors to understand. To mitigate the risk of 
contagion, depositors need to be confident that they will be reimbursed quickly and with 
certainty. For these reasons, and because of the procyclicality associated with ex-post levies, it is 
recommended that: 
 
A paid-in fund is introduced with a target level of funding based upon the failures of a 
number of midsize institutions, supplemented by back-up lending from the authorities. 
 
A fixed deadline is adopted for paying insured deposits, preferably within seven days.
16 
 
At least six board members of Esisuisse should be independent of the banking industry.
17
 
The two exempted deposit-takers should become regulated members of the scheme. 
77. Esisuisse’s mandate should be widened to allow it to finance resolution measures.  
Without access to adequate funds, resolution powers may prove ineffective in practice. Sufficient 
good quality assets are unlikely to remain unencumbered on the balance sheet of a failed bank 
(e.g., to finance a transfer of deposits). A wider mandate should be accompanied by other 
reforms to ensure that Esisuisse could not incur greater costs than in liquidation, to remove 
active bankers from the governing bodies, and invest it with wider responsibilities and more 
resources.
18
14
Deposit insurance covers deposits booked in Switzerland only, whereas deposit preference extends to deposits 
in overseas branches of Swiss banks. 
15
Sw F 6 billion is equivalent to 1.4 percent of insured deposits and would cover the insured deposits of any 
individual bank failure, except for the ten largest banks.
16
At least for initial payments, with full payout no later than 20 days. The timelines should be based on when 
insured deposits are reimbursed not when funding is available from Esisuisse.
17
Currently most board members are active bankers, and most large banks are represented. 
18
Including to collect information from banks, directly effect payouts, and participate in the Financial Stability 
Committee. 

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SWITZERLAND