Switzerland Debates ‘Bank Separation’
April 6, 2023, 2022 (EIRNS)—The call for separating depositary banks from private merchant banks, which are using individuals’ and firms’ deposits in commercial and savings banks in order speculate especially in derivatives, is growing in Switzerland in the wake of the Credit Suisse (CS) debacle. When officials of the Swiss Financial Market Supervisory Authority (Finma) called a press conference yesterday, journalists asking whether the reason was “because you fear the call for a banking separation?” They also asked, “When did the United States start to apply pressure” to bail out Credit Suisse in order to avoid systemic contagion?
While Finma Board Chairwoman Prof. Dr. Marlene Amstad simply ducked the first question, CEO Urban Angehrn addressed the second, replying: “There was no pressure from the United States to save CS. We were always in a dialogue with U.S. officials, but we did not need pressure from abroad. We had to do what is right for Switzerland, and it was right for the U.S.A. as well,” according to Swiss news agency 20minutes. Thus he indirectly admitted that the Credit Suisse bailout has avoided the worst for the U.S.A.
Also on April 5, economist Hans Geiger argued for the government to implement bank separation. In a video interview with Zürich financial site Inside Paradeplatz, he remarked, “with a bank separation system, this crisis would not have occurred.” Therefore, he said, the government must now act. The investment banking division of UBS, which bought up Credit Suisse, must be separated and cut off from central bank liquidity, as anything else would be high risk.
It is expected that the issue of bank separation will be raised by some legislators at the special joint session the National Council and Council of States of the Federal Parliament next week.