Switzerland Moves to Adopt Public Liquidity Backstop

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Switzerland on Wednesday moved to put into law a state liquidity provision it had needed emergency law to use in its rescue of Credit Suisse, the Federal Council said on Wednesday.

In March Credit Suisse was given access to a public liquidity backstop of 100 billion Swiss francs after it was ensnared in market turmoil and clients rapidly pulled money, leading to the Swiss bank being taken over by its former rival.

The backstop was backed by the federal government and allowed the struggling bank to tap more liquidity from the central bank than it would otherwise have been able to.

The Federal Council said it sees the internationally widely used crisis tool as a way to strengthen the stability of the finance sector.

The dispatch on the introduction of the backstop announced on Wednesday would allow for individual provisions introduced in March with an emergency ordinance to become law.

Parliament is expected to consider the bill in December at the earliest, according to a person familiar with the situation.

UBS (UBSG.S) had said in August it no longer needed the backstop, freeing it of taxpayer-backed funding.

($1 = 0.8897 Swiss francs)

Source : Reuters