Swiss National Bank President, Thomas Jordan, has highlighted the importance of the ELA+ loan for Credit Suisse, stating that without it, the bank would have been unable to fulfill its financial obligations, posing a threat to systemic stability. This aligns with the views expressed by FINMA CEO Urban Angehrn, who warned that if Credit Suisse had gone bankrupt, it would have severely impacted the Swiss economy and led to deposit runs on other banks.
While recognizing the significance of the ELA+ loan, Jordan also emphasized the need to learn from this event. He stated that liquidity regulations should be revisited to better protect against the rapid and substantial outflows of customer deposits. Reuters reports that Jordan believes there are important lessons to be learned in this regard.
The Swiss government, Swiss National Bank, and FINMA have faced criticism and legal challenges for their handling of the forced takeover of Credit Suisse. One particular area of concern is the lack of shareholder input and the writedown of $17 billion of Credit Suisse’s additional tier-one (AT1) bonds to zero, while common stockholders received payouts. This decision has sparked lawsuits from bondholders seeking compensation for their losses.
It is clear that the events surrounding Credit Suisse have prompted a deeper examination of liquidity regulations and the need for better protection against potential financial crises. This incident serves as a reminder of the importance of maintaining stability in the banking sector to safeguard the overall economy.
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