Featured Product

    IMF Publishes Reports on 2019 Article IV Consultation with Switzerland

    June 26, 2019

    IMF published its staff report and selected issued report in context of the 2019 Article IV consultation with Switzerland. The IMF Directors welcomed the Financial Sector Assessment Program (FSAP) findings and endorsed its main recommendations. They supported expanding the macro-prudential toolkit to encompass additional mandated instruments. Directors also recommended strengthening the governance, autonomy, and resources of the financial sector supervisor and allowing the supervisor to directly contract and pay for outsourced supervisory audits. They encouraged further reinforcement of the financial safety net and crisis management arrangements, which includes improving recovery and resolvability of banks and establishing an effective public deposit insurance agency.

    The staff report highlighted that considerable progress has been made in strengthening the banking sector resilience; however, sustained low interest rates and high real estate exposure are creating risks. Stress tests performed in the context of FSAP find financial institutions to be well-capitalized and liquid and resilient to severe shocks, although some banks would breach their capital buffers under a very adverse scenario. However, very low and flat yield curves are encouraging greater risk-taking by banks (as they pursue higher-yield lending to counter narrowing interest margins), downward pressure on lending rates from competition from non-banks with lower funding costs, and rollover of maturing mortgages at lower rates. Pension funds and insurance companies, which face high statutory payout rates, continue to invest in residential investment properties, including in regions with high vacancy rates. New targeted macro-prudential measures are needed to curtail the further buildup of risk in the banking and real estate sectors. 

    The complexity and large size of the Swiss financial system calls for continual upgrading of the regulatory and supervisory frameworks and capacities. Considerable progress has been made to strengthen supervision, although important deficiencies remain. To better manage the conflict of interest and objectivity concerns, FINMA should directly contract and pay audit firms for supervisory audits of banks and should conduct more on-site inspections, especially of the largest banks. Protections against cyber risk and closer oversight of fintech activity are warranted. Strengthening the governance and autonomy of FINMA and upholding its authority to set binding prudential requirements are critical to maintaining financial stability. Progress in reinforcing financial sector safety nets and crisis management arrangements has been made, but more work is needed to further improve recovery and resolvability of banks and to create a public and fully funded bank deposit insurance agency, in line with the international norms. Important data gaps, including on fintech, should also be remedied.

     

    Related Links

    Keywords: Europe, Switzerland, Banking, Insurance, FSAP, Article IV, Recovery and Resolution, Governance, Fintech, Pensions, Macro-prudential Policy, FINMA, IMF

    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8183